Progress, Impacts and Outlook for Transforming Britain's

Energising Progress, impacts and outlook for transforming Britain Britain’s energy system 2 Energising Britain Progress, impacts and outlook for transforming Britain’s energy system

November 2018

Authors: Dr Iain Staffell, Dr Malte Jansen: Imperial College London Adam Chase, Chester Lewis, Eloise Cotton: E4tech

Please refer to this report as: I. Staffell, M. Jansen, A. Chase, C. Lewis and E. Cotton, 2018. Energising Britain: Progress, impacts and outlook for transforming Britain’s energy system. Drax Group: Selby.

3 Preface

This report was commissioned Drax Group by Drax Group and delivered Drax Group plc plays a vital role in independently by academics from helping change the way energy is Imperial College London (facilitated generated, supplied and used for a by the College’s consultancy better future. Its 2,300-strong staff company, Imperial Consultants), operate across three principal areas of and consultants from E4tech. activity – electricity generation, electricity sales to business customers and Drax Group commissioned the compressed wood pellet production. authors to conduct new research into how transformations in Britain’s Imperial Consultants energy system are likely to impact Imperial Consultants provide access to over the country’s economic, societal 4,000 research-active expert academics and environmental outcomes. and Imperial College London’s state of the art facilities to deliver innovative The aim of this research is to solutions to meet the business needs of provide insight into the changes industry, government and the third sector. that are occurring and those that are needed to ensure that energy E4tech system transformation unlocks E4tech is an international strategic opportunities for businesses, consultancy focused on sustainable energy. government and households E4tech helps clarify and simplify complex in a just and equitable way. and uncertain situations, to achieve solutions that are technologically, This report is the independent economically and environmentally sound opinion of the authors. It focuses on Great Britain rather than the United Kingdom as lack of data prevented Northern Ireland from being included.

Cover illustration: viewcreative.co.uk

4 Foreword

Our world is changing fast. Now, for the first time, this report gives us aim to bolster our ability to provide flexible, some answers. Researchers from Imperial low-carbon generation further − supporting New technologies are transforming College London and E4tech have looked the increase in solar and wind power across the way we live and work. They right across our economy. Using 20 different Britain’s energy system. We’re trialling are changing businesses and metrics they have assessed progress in innovative Bioenergy Carbon Capture Use communities and creating huge critical sectors including power, transport and Storage technology, which is the first of opportunities to improve our and industry. Crucially they’ve also broken its kind in Europe and has the potential to quality of life, and Britain’s ability down their findings to a regional level. deliver negative emissions. And through our to compete in a global economy. retail businesses we are helping thousands The results make stark reading. While real of business switch to use 100% renewable This shift is being enabled by a revolution progress has been made in some sectors energy, and use it more efficiently. taking place across our energy system – to decarbonise, others lag behind. ultimately to a zero carbon, low cost system But, this report shows us there is much more where technology and data will enable While most nations and regions have to do. businesses and homeowners to create taken steps to create the future energy energy as well as use it, and give them system we need, the picture is not uniform. We will continue to invest in and develop more control over the energy they use. Most worrying is clear evidence that once the new technologies which will finish again a divide is opening between those the job of taking Drax off coal, ensure we These changes are creating significant parts of the country where people are become zero carbon and play a bigger benefits. But as in every transition there is a better placed to take advantage of new part in decarbonising the wider economy. risk that those most able to take advantage technologies – and those who are not. of new technologies will enjoy their And, we will continue to help our customers benefits first while others get left behind. The conclusion is clear: Failure to address reduce their own carbon emissions, save these energy divides will leave some money and create new revenues from A failure to ensure the transition is enjoyed communities falling behind. It will restrict energy production which will boost their across Britain will also undermine much our businesses ability to compete in a ability to compete in their own markets. needed progress to decarbonise our fierce global economy. And our efforts to economy and tackle climate change. tackle climate change will be hindered. Our role is clear. Drax is enabling a zero carbon, lower cost future for all. Drax, is at the heart of the energy transition. To respond energy companies, businesses, We see these changes taking place communities and governments must work This report reinforces the challenges ahead, every day – across our businesses, and together. Drax is committed to play our part. but also the opportunities to meet them. I among the customers and communities commit Drax to playing our part to do so. we serve. What’s less clear is how I’m proud of the contribution we have Britain is faring through this change. already made. We have transformed the UK’s largest coal-fired power station to become the biggest decarbonisation project in Europe and the country’s biggest renewable power generator. Today, we maintain significant generation capacity

Will Gardiner Will Gardiner Chief Executive, Drax Group

5 Executive Summary

Electrification is essential, touching all This assessment is the first to examine Why this elements of Britain’s changing economy and Britain’s energy transition at the regional energy system. Renewable electricity has level,a showing where each aspect of the report matters radically transformed the power sector, and energy system currently stands and where it electric vehicles are poised to revolutionise must go to avoid being left behind. It looks transport. Electricity could lower the cost more broadly than raw emissions reductions Major pressures are shifting the and pollution from home heating and the to consider the many infrastructural enablers UK’s patterns of employment, daily commute, as well as the way in which for revolutionising the energy system. leisure, travel and industry, with large buildings and factories operate. Crucially, it explores what these changes consequences for our energy Alongside electricity, other ingredients of the will mean for individual households, needs. At the same time, the UK future energy system will include a growing businesses and society as a whole, and has made strong commitments to role for data, minimising energy use when exposes the important regional differences reduce greenhouse gas emissions power is in short supply and maximising that are developing within Britain. Without related to energy. Many towns use when and where it is plentiful, making awareness of these regional disparities and and cities struggle with chronic intelligent use of low carbon fuels and heat, their potential impacts, Britain risks creating air pollution from cars, vans and and potentially capturing greenhouse gases. a two-tier energy system, where some get lorries. Businesses and households Together these changes are known as the ahead with the fuels and technologies of face rising energy bills, putting ‘energy revolution’. There is strong global the future, while others are left behind with a squeeze on both economic evidence of the imperative for this significant the higher costs, environmental and health competitiveness and quality of life. and – increasingly – urgent change. problems that come from burning legacy fossil fuels - leaving millions of families Work towards the energy revolution is and businesses less equipped to enjoy underway in UK, but so far much of the cheaper bills and better outcomes. action has been behind the scenes. The sweeping changes to how we generate electricity have not changed what happens when you turn on the lights at home, but the Britain risks creating a two-tier next steps will impact on everyday life for energy system, where some many. The emergence of electric vehicles, get ahead with the fuels and intelligent home energy management and technologies of the future, zero-carbon buildings are all necessary to while others are left behind stay competitive and honour our climate with the higher costs, change and related policy targets. These environmental and health will have profound implications on the cost problems that come from of energy and how people receive energy burning legacy fossil fuels - services, so it is imperative to outline these leaving millions of families changes for stakeholders of all types. and businesses less equipped to enjoy cheaper bills and The UK’s energy transition is well described better outcomes. by national and international expert bodies, but mainly looking at individual components of the system in terms of technologies, costs and benefits. These studies treat countries and continents as a whole, potentially missing the important socio-economic and environmental differences that exist within countries.

This assessment is the first to examine Britain’s energy transition at the regional level, showing where each aspect of the energy system currently stands and where it must go

to avoid being left behind. a Northern Ireland’s electricity system is largely separate from that of Great Britain, so this study focuses on GB rather than the UK

6 Britain’s energy transition progress

This report analyses Britain’s complex and highly interdependent energy system by considering power generation and then energy use in transport, buildings and industry.

Within these four sectors, 20 measures POWER: have been devised to represent Britain’s progress towards having an energy system Smart Electricity Inter- Transmission Demand side Carbon that’s fit for the future, and can serve meters storage connection response intensity households and businesses with clean, secure and low-cost energy. Aggregate progress is summarised below with a TRANSPORT ‘barometer’ for three of the four sectors:b

GHG Hydogen Electric Rail Plug-in EV Electric emissions stations HGVs cars chargers buses

HOSIN

Fuel Heat Non-res Non-res Household Household Electric poverty pumps efficiency emissions efficiency emissions heating

Not on track Within 90% of target Ahead of target

Britain’s greenhouse gas (GHG) emissions All of this is made harder still by the need The efficiency of Britain’s building stock is a have fallen since 1990, but the decline is not for most industries to remain internationally critical issue, with 13% of homes suffering evenly distributed across energy sectors. competitive whilst avoiding the ‘offshoring’ from fuel poverty, and non-domestic The outstanding success has been in the of emissions and jobs to other countries. buildings generally worse than households. power sector, chiefly through closing coal- UK buildings remain largely heated by fossil fired generation and the rise of renewables, In contrast with the power sector, the fuels, so only a few parts of the UK are well- also benefiting air quality. Further progress limited pace of transformation in transport placed to benefit from the decarbonisation is expected, raising the importance of and domestic heating means that there is of power through electric heating. The a smart and flexible power system that much more to do. Of particular concern is outlook for heating is unclear, with heat features demand side response, storage, air quality in Britain’s cities and the slow pumps, electric heating and hydrogen each interconnections and smart meters. Most progress being made on diesel pollution, having their proponents, but no overall of these areas are behind target, requiring but CO2 emissions from transport are direction. Regardless of the pathway choice immediate efforts to bring them in step with also on the rise, especially from goods (which is needed urgently) building efficiency growing renewables. vehicles. The stage is set for a radical will be a core feature. Thankfully, appliances shift in transportation thanks to recharging and lighting in buildings have seen improved The rapid clean-up of the power sector infrastructure growth and EV sales picking efficiency and thus reducing pressure on has fed through into electricity-consuming up; over a quarter of new vehicle sales energy bills and indirect GHG emissions areas such as industry, where economic are expected to be ‘plug-ins’ by 2030 from the power sector. growth has decoupled from GHG emissions. and forecasts are frequently being revised Britain’s industry is currently on track to upwards. Electric buses are finding a reach climate targets. Absolute electricity place in cities where pollution is a pressing use in industry has stayed constant while problem, but electric goods vehicles are fossil fuel combustion has declined, as some way behind. Hydrogen vehicles and processes have been electrified and infrastructure remain in their infancy in UK, efficiency increases have been made. though these provide a zero emission option Further electrification will be harder, so for goods vehicles, where batteries appear GHG reductions may need to come through less suitable. Furthermore, hydrogen may offer technologies such as hydrogen and carbon a means to electrify railway lines where the capture use and storage (CCUS). cost of overhead power lines is prohibitive.

b Note that data are too scarce to support an equivalent summary for industry

7 Executive Summary

Regional disparities

Progress in transforming Britain’s energy system is uneven and this report reveals marked differences between the regions.

Generally, more affluent regions have made POWER, TRANSPORT & BUILDINGS Energy efficiency in buildings is Not on Within 90% Ahead significantly greater progress. The north track of target of target neglected across Britain, and of England is falling well short, with only much lower than is justifiable. London and Scotland coming close However, it is generally better in to being on track to meet their overall the south of England and Scotland targets. This first step towards exposing and worse in the Midlands, the differences between the regions paints northern England and Wales. an instructive picture of Britain’s unequal The North East has done the progress, and it should be remembered most to fix low-efficiency houses, that differences within individual but still has high fuel poverty regions will be similarly important. rates due to income levels and remaining poor quality buildings.

Renewable power generation is distributed East Wales London Scotland Yorkshire according to natural resources, so England South West South East North West North East West Midlands East Midlands has much less low-carbon power per person than Scotland and Wales. However, In a fast-changing transport picture, the West Midlands Scotland and Wales also have some and the East currently have the highest uptake of of the lowest transmission capacities passenger electric vehicles, London has the most to neighbouring regions, holding back electric buses, while the South East, northern regions of further development of renewables. In England and Scotland have the highest share of ultra- contrast with the general picture for low emission HGVs. On an absolute basis, however, most metrics, Wales and the North East the south of England is leading in the deployment have the highest penetration of smart of plug-in electric vehicles, which is correlated to meters in Britain, London the lowest. higher household incomes in these regions.

Implications for individuals, businesses and society

Cost reductions in key technologies Homes and companies in London and the In industry, further electrification may such as renewable generators and South East spend less on energy relative to be difficult without impacting on energy batteries show that the costs of income. Those in Wales and the North East costs, unless measures are taken to level transforming the energy system spend the most, so any changes to energy the playing field. The changing power could be modest. Ultimately, costs will make the greatest difference to the mix is shifting employment patterns, with moving to modern clean energy welfare and profits of homes and businesses job losses in fossil fuels offset by gains could result in the lowest in these areas. In transport, the total cost in new industries, often in poorer remote bills, although any increased of owning electric vehicles is on track to areas. Electrification and automation often capital costs to consumers and reach parity with conventional vehicles. go hand in hand, and the South East, businesses should be considered However, the higher upfront purchase price Midlands and north of England face the in the context of affordability. of EVs poses a greater affordability barrier highest risk of job losses from automation. in less affluent regions. Scotland and Wales have lowest EV affordability, the West Midlands and London the highest. If marked differences in uptake arise from this, Britain’s cities could see rising inequality due to the health effects of air pollution.

8 Overall conclusions

In this first assessment of Britain’s As in other walks of life London stands energy transition, there is much apart, whilst less affluent regions in the to be positive about, but the north and elsewhere are falling behind observation that “the future is on many measures. If the sole aim of the already here – it’s just not very transition were to decarbonise energy, it evenly distributed” applies. might be rational to focus on wealthier metropolitan areas like London ahead of The rapid decarbonisation of electricity the rest of the country. However, if this is a feather in the UK’s cap, providing a begins to affect our way of life through the means to transform electricity-intensive cost of energy, quality of services and air sectors. Buildings and to some extent pollution then such a strategy risks creating industry are already benefiting, whilst a twotrack energy system that worsens transport is potentially well-positioned. regional inequality. To be effective, the UK’s There are tough challenges ahead energy transformation needs be a force though, since areas such as heavy for good across society and across the industry, freight transport and some UK, not just where it is most convenient. parts of heating do not immediately lend themselves to electrification, so other options need to be considered. To be effective, the UK’s energy The uneven distribution of change also transformation needs be a applies regionally and socially. A looming force for good across society concern is the effect of disparities in and across the UK, not just the energy transition, with some at where it is most convenient.. risk of being left behind economically due to unaffordable changes.

As in other walks of life London stands apart, whilst less affluent regions in the north and elsewhere are falling behind on many measures.

9 10 Table of contents

Preface 4 Section 4: Energy in buildings 42 Foreword 5 4.1 Overall buildings current status and future targets 43 4.2 Current status and future targets for domestic buildings 44 Executive Summary 6 4.2.1 Domestic GHG emissions 44 Why this report matters 6 4.2.2 Energy efficiency 45 Britain’s energy transition progress 7 4.2.3 Fuel Poverty 46 Regional disparities 8 4.2.4 Electrification of heating 47 Implications for individuals, businesses and society 8 4.2.5 Heat pump deployment 48 Overall conclusions 9 4.3 Implications for household consumers 49 4.3.1 Household energy costs 49 Table of contents 11 4.3.2 Changes in household energy costs 50 4.4 Current status and future targets for non-domestic buildings 51 Section 1: Introduction 12 4.4.1 Non-domestic GHG emissions 51 1.1 Context and motivation 12 4.4.2 Energy usage in non-domestic buildings 51 1.2 Scope and methods 13 4.4.3 Non-domestic energy efficiency 52 1.2.1 About this study 13 4.5 Implications for business costs and competitiveness 53 1.2.2 Technological and geographical scope 13 4.6 References 54 1.2.3 Underlying methodology 13 1.3 Background 14 Section 5: Energy in industry 55 1.3.1 The regions of Britain 14 5.1 Overview 55 1.3.2 What is electrification? 15 5.2 Current status 55 1.3.3 The sectors in context 15 5.2.1 Industrial sector emissions and energy use 56 1.4 References 16 5.2.2 The top 10 consuming industries 57 5.2.3 Industry by region 57 Section 2: The power system 17 5.3 Implications of a transitioning industrial sector 58 2.1 Current status and future targets for the power sector 18 5.3.1 Changes in energy cost from increased 2.1.1 Carbon intensity 20 electrification of industry 58 2.1.2 Interconnection 21 5.3.2 Automation 59 2.1.3 Storage 22 5.4 References 60 2.1.4 Network and transmission capacity expansion 23 2.1.5 Smart meter roll-out 24 Section 6: Regional implications 61 2.1.6 Demand side response 25 6.1 London 62 2.2 Implications of a transitioning power sector 26 6.2 Scotland 63 2.3 References 27 6.3 East of England 64 6.4 South West 64 Section 3: Energy in transport 28 6.5 South East 65 3.1 Current status and future targets in transport 29 6.6 West Midlands 65 3.1.1 GHG emissions from transport 30 6.7 Wales 66 3.1.2 Plug-in vehicles in the car fleet 31 6.8 East Midlands 66 3.1.3 EV charging points 32 6.9 Yorkshire and the Humber 67 3.1.4 Hydrogen refuelling stations 33 6.10 North West 67 3.1.5 Electric and hydrogen bus penetration 34 6.11 North East 68 3.1.6 Ultra-low emissions heavy goods vehicles 35 3.1.7 Rail emissions 36 Section 7: Conclusions 69 3.2 Implications of a transitioning transport sector 37 7.1 Power 70 3.2.1 Total cost of car ownership passenger vehicles 37 7.2 Transport 70 3.2.2 Availability of electric vehicle charging points 39 7.3 Buildings 70 3.2.3 Railway investment 40 7.4 Industry 71 3.3 References 41 7.5 Concluding remarks 71

Appendices 72 Appendix 1: Modelling vehicle TCO 72 Appendix 2: Detailed analysis of vehicle TCO 73 Appendix 3: Modelling cost of heating electrification 74 Appendix References 75

11 Section 1: Introduction

1.1 Context and motivation

The energy transition is being driven top down by climate and environmental policy and bottom-up by evolving consumer preferences and technological innovation. Britain has made excellent progress in transforming its power sector, at a world-leading pace, which has allowed decarbonisation that is largely invisible to consumers – no change in lifestyle, added daily considerations and little impact on bills.

There is a growing recognition that This change could have profound social change must now sweep through and economic implications for the country. other sectors; we must transform the If some sectors or regions forge ahead way energy is provided in homes, and others are left behind, this could businesses, transport and industry. There create a two-speed economy and lead to is a huge opportunity for newly-cleaned substantial differences in the cost of energy. electricity to transform these sectors. Some may be forced to use legacy infrastructure and support it together with a The key gaps are: dwindling consumer base, whereas others • Understanding how the country is may take advantage of affordable lowcarbon progressing more broadly towards a solutions independent from these costs. transformed energy system. Carbon emissions are well understood, but are the wider changes to electrification and its enabling infrastructure also making headway?

• Understanding the differences within Britain – national studies mask regional differences – are we at risk of creating winners and losers in the energy transition?

12 1.2 Scope and methods

1.2.1 About this study 1.2.2 Technological and 1.2.3 Underlying methodology This study sets out to explore the geographical scope The main principle for our current status of the power system The Energising Britain work assessment is to derive metrics and how it needs to change to deal examines Britain’s energy system that identify the state of transition with electrification demands and in the context of the 2008 Climate of the energy system. the need for low-carbon power. Change Act and the COP21 The current status, targets and Paris Climate Agreement. To These metrics are presented as a regional disparities in the energy achieve this, not only power ‘barometer’ which sets out three points: transition in end-use sectors are but also the transport, buildings mapped. Finally, the implications and industrial energy sectors 1. the end-point of the transformation for that can be drawn from these need to be decarbonised. the target year in the scenario (e.g. total results for technologies and socio- number of EV charging points in 2030), economic factors are evaluated, Given the ongoing decarbonisation of the focussing on affordability, electricity system and the continuously 2. the current state of transformation competitiveness and jobs. falling costs of renewables, this work (e.g. number of charging investigates how all energy sectors can be points operational), and This work was commissioned by Drax decarbonised through electrification. This to assess the state of energy system entails the use of lowcarbon generation 3. an indication of where we would transformation across all sectors. It is technologies, hydrogen and carbon capture have to be to meet the target delivered independently by academics at use and storage (CCUS) where suitable. (e.g. number of charging points). Imperial College Londona and sustainable energy consultants E4tech. To understand the regional differences Justifiable targets for each metric This report is the start of an ongoing in how Britain’s energy system is being are derived which show the state of discussion titled Energising Britain, transformed, this report considers the 11 transformation and where we should be if where future outlook reports will address unitary regions of Great Britain (Scotland, we are to fulfil our legal obligations. The aspects of the energy transition. Wales, and 9 in England). Northern end-point targets allow us to locate our Ireland could not be included due to the position in the energy transition in line with availability of data, and because of the carbon budgets and climate targets. different electricity markets operating on the islands of Ireland and Great National and regional level data have Britain. Northern Ireland accounts for been gathered for each metric in order approximately 3% of the population to explore regional disparities and their and energy consumption of the UK. implications for people. This translates energy systems findings into social and economic implications. The analysis is based on public data, primarily government sources, providing transparency, accuracy and independence. Especially in the case of target definitions for individual metrics, the study relies on energy system scenarios, published by National Grid, HM government including BEIS and the Committee on Climate Change (CCC).

13 end-point targets allow us to locate our position in the energy transition in line with carbon budgets and climate targets.

National and regional level data have been gathered for each metric in order to explore regional disparities and their implications for people. This translates energy systems findings into social and economic implications. The analysis is based on public data, primarily government sources, providing transparency, accuracy and independence. Especially in the case of target definitions for individual metrics, the study relies on energy system scenarios, published by National Grid, BEIS, HM government and the Committee on Climate Change (CCC). 1.3 Background 1.3 Background 1.3.1 The regions of Britain 1.3.1 The regions of Britain FigureFigure 1.1 presents 1.1 presents some underlying some underlying indicators for indicators the 11 unitary for regions the 11 of Britainunitary (and regions Northern of Ireland) Britain for context. (and Northern Ireland) for context.

Energising Britain 11

Figure 1.1: Key socio-economic indicators for the UK’s 12 unitary regions.

There are already many differences in the regions have different starting points. regions’ starting points: London stands out Some regions may have an advantage, for as a purely urban region with high incomes example in terms of income or commercial and population density; the Midlands and and industrial economic activity and are Wales are the most industrialised; wealth therefore better positioned to make certain is divided between north and south. changes. The overarching question is whether the energy transition changes As this study investigates the socio- this picture for better or for worse. economic impact of the energy system transition, it must be noted that the unitary

14 1.3.2 What is electrification? 1.3.3 The sectors in context decrease its share of total GHG emissions The general discussion on This study investigates the power, over the last 5 years (Figure 1.2). In 2017 electrification of the energy transport, buildings and industrial over two thirds of electricity supply was sector is often focussed on the sectors and the extent of their consumed by buildings, just under a electrification of road and rail transformation. All sectors need to third in industry and the remaining small transport. This ignores the fact that decarbonise to ensure the overall percentage in transport (Figure 1.3). many other areas of the economy national target is met, meaning and society in Britain are being that many sectors will need to The transport sector’s relative share of electrified. Therefore, this study undergo further transformations. total GHG emissions has been increasing provides a more holistic approach since 1990 (Section 3.1) and for the at the decarbonisation of all energy Sectors, such as agriculture, remain first time in 2016 the share of transport sector (power, building, transport outside the scope of this study, but do, emissions surpassed the share of emissions and industry) and answers the however, contribute to net GHG emissions. originating from the energy supply sector. In question on what the electrification Electricity supply is being treated as its absolute terms, however, total GB transport of Britain’s economy will look like own sector, meaning the related GHG emissions have decreased compared to and the technologies involved. emissions from electricity production are 1990 and 2008. This is likely linked to the Theattributed transport to the sector’ssector. GHG relative emissions share of totalglobal GHG recession, emissions increased has been fuel efficiency, increasing On the supply side, i.e. the power system, sinceonly include 1990 direct (Section emissions 3.1) for and the for end- the first and time increased in 2016 use the of renewable share of energy transport in low-carbon technologies to mitigate emissionsuse sectors, surpassed unless otherwise the shar specified,e of emissions transport. originating Only 2% from of the the energy energy used supply in greenhouse gas (GHG) emissions are in sector.therefore In excluding absolute the terms, indirect however, emissions total GBtransport transpor comest emissions from electricity, have decreasedand this focus as well as technologies that allow for comparedassociated towith 1990 electricity and 2008.use. This is likely linkedhas remained to the globalfairly constant recession, since increased at least the integration of these low carbon sources fuel efficiency, and increased use of renewable2008 energy (Figure in 1.4). transport. The sector Only is still 2% heavily of the (e.g. energy storage). The study identifies energyThe power used sector in has transport seen large comes reductions from electricity,reliant on fossil and thisfuels, hasthough remained there have fairly a list of technologies which are considered constantin GHG emissions since at (Sectionleast 2008 2.1), (Figure causing 1.4). Thbeene sector recent is stillincreases heav ilyin thereliant use ofon biofuels fossil- relevant when electrifying the energy system. fuels,the energy though supply there sector have to beenheavily recent increasesand in electricity, the use especiallyof biofuels in androad electricity, transport. As these technologies mature, the picture especially in road transport. will change and this list will have to be adjusted. The technologies that are currently relevant in the power sector are wind and solar, nuclear, batteries and storage, gas-fired generators with carbon capture use and storage (CCUS), grid expansion and construction of interconnectors, smart meters and demand side response (DSR).

On the building side, besides increasing energy efficiency, we are looking at electrifying heating with heat pumps and 1 electric heaters. The transport sector of FigureFigure 1.2:1.2: Greenhouse Greenhouse Gas Gas Emissions Emissions by bysector, sector, 1990–2017 1990–2017 – direct – direct emissions emissions accounted accounted from sourcefrom source1 . the energy system includes the state and Emissions from buildings are a combination of the Household and Business & Public target for key transport technologies, SectorsEmissions in fromFigure buildings 1.2. In are 2017, a combination GHG emissi ons from buildings accounted for 19% of such as electric vehicles (cars, buses 2 totalof the GHGHousehold emissions and Business (Section & Public 4.1) . The share of direct emissions from all sub- Emissions from the industrial sector are and HGVs), charging points, hydrogen sectorsSectors in of Figure buildings 1.2. In 2017, have GHG remained relatively constant since 1990, with the composed of emissions related to refuelling station and electrification of rail. residentialemissions from sub-sector buildings showing accounted a smallfor increase. In absolute terms, all of these sub- industrial processes, as well as some sectors,19% of total thus GHG the emissionsbuildings (Sectionsector as a whole, have significantly reduced their direct business and power sector emissions. In Lastly, the current status of industry and emissions4.1)2. The share during of direct this emissions period. Electricity from use in buildings has remained relatively 2017, the industrial sector made up 23% implications from trends in the industrial constantall subsectors since of 2008,buildings suggesting have remained that direct emission decreases are linked to other of total GHG emissions. The emissions sector are discussed. It is noteworthy that factorsrelatively rather constant than since increased 1990, with electrific the ation rates (e.g. energy efficiency). this sector has the least data coverage. from industry are discussed in more residential sub-sector showing a small As the energy system transition continues, detail in Section 5.2. Further, electricity increase. In absolute terms, all of these measuring the progress in industry will use in industry has consistently subsectors, thus the buildings sector be required to track the overall progress FigureFigure 1.3: 1.3: The The share share of electricity in total in total energy energy remained around a third of total energy as a whole, have significantly reduced 3 towards climate targets and avoid consumptionconsumption by byend-use end-use sectors sectors inin 2017.2017.3 their direct emissions during this period. usage (Figure 1.4). unintended socio-economic implications Electricity use in buildings has remained of a transitioning energy system. The relatively constant since 2008, suggesting heterogeneity of industrial processes 14 Introduction that direct emission decreases are linked requires an approach which presents to other factors rather than increased key metrics, such as energy intensity as electrification rates (e.g. energy efficiency). a function of Gross Value Added (GVA), GHG emissions or energy use. The social- economic implications of the energy system transition to further electrification and/or automation are presented.

Figure 1.4: The use of electricity in the sector as a percentage of total energy consumption4.

As mentioned above, electricity usage in the sectors investigated for this report has remained fairly constant since 2008. Increasing electricity use can reduce the direct emissions of an end-use sector, especially if the electricity is replacing a fossil fuel. However, depending on the carbon intensity of the power sector, total (direct and indirect) greenhouse gas emissions could increase.

1.4 References

1 BEIS (2018) Final UK greenhouse gas emissions national statistics 1990-2016 2 CCC (2018) 2018 Progress Report to Parliament 3 BEIS (2018) Energy Trends, March 2018 4 BEIS (2017) Energy Consumption in UK

Energising Britain 15

Emissions from the industrial sector are composed of emissions related to industrial processes, as well as some business and power sector emissions. In 2017, the industrial sector made up 23% of total GHG emissions. The emissions from industry are discussed in more detail in Section 5.2. Further, electricity Emissions from the industrial sector are composed of emissions related to industrial use in industry has consistently processes, as well as some business and power sector emissions. In 2017, the Figure 1.3: The share of electricity in total energy remained around a third of total energy consumptionindustrial by end-use sector sectors made in up2017. 23%3 of total GHG emissions. The emissions from industry usage (Figure 1.4). are discussed in more detail in Section 5.2. Further, electricity use in industry has consistently remained around a third of total energy usage (Figure 1.4).

4 Figure 1.4:Figure The 1.4: use The of use electricity of electricity in thein the sector sector as as aa percentage of of total total energy energy consumption consumption4 .

As mentioned above, electricity usage in the sectors investigated for this report has remainedAs mentioned fairly constant above, electricity since 2008. usage Increasingin the sectors electricity investigated use for thiscan report reduce has the direct remained fairly constant since 2008. Increasing electricity use can reduce the direct emissions of an end-use sector, especially if the electricity is replacing a fossil fuel. emissions of an end-use sector, especially if the electricity is replacing a fossil fuel. However, depending on the carbon intensity of the power sector, total (direct and However, depending on the carbon intensity of the power sector, total indirect) greenhouse gas emissions could increase. (direct and indirect) greenhouse gas emissions could increase. 1.4 References

1 BEIS (2018) Final UK greenhouse gas emissions national statistics 1990-2016 2 CCC (2018) 2018 Progress Report to Parliament 3 1.4 References BEIS (2018) Energy Trends, March 2018 4 BEIS (2017) Energy Consumption in UK 1 BEIS (2018) Final UK greenhouse gas emissions national statistics 1990-2016 2 CCC (2018) 2018 Progress Report to Parliament

Energising3 BEIS Britain (2018) Energy Trends, March 2018 15 4 BEIS (2017) Energy Consumption in UK

16 Section 2: The power system

The UK’s carbon budgets require major decarbonisation of energy supply. By 2050, virtually all electricity must come from clean sources. Large scale use of intermittent renewables will require extensive flexibility options for balancing.

Many options exist: interconnection, The structure of the housing sector is a regions which can take advantage of storage, demand side response and flexible strong influence: lower home ownership these (through electric vehicles and heat generation; so consumers should not see places some regions at a disadvantage. pumps) could see the cheapest energy. any difference in terms of supply quality. Demand response from commercial Renewables have led to job creation, The current pathway relies heavily on and industrial sites is already active, especially in poorer regions. wind and solar power, driven by the large but the large domestic resource (e.g. Scottish renewables have created cost reductions they have experienced. smart appliances such as fridges and a strong new industrial sector. If these intermittent renewables continue washing machines) cannot be tapped to dominate future electricity supply, the without rollout of smart meters. Job losses in the legacy fossil-fuel location of power generation will change sectors are offset by growth in renewable and the economic activity that comes with Energy bills may be higher than today industries. The dispersed nature it – favouring rural and coastal areas. regardless of power sector transformation, of renewables means that the jobs due to rising fossil fuel system service created in construction, operation and The roll-out of smart meters is taking place costs. However, large cost reductions in maintenance are in more remote areas, at very different speeds across Britain. key technologies such as renewables, giving a welcome employment boost. Wales is leading whereas London is lagging. batteries and hydrogen suggest that

2 Section 2: The power system

Figure 2.1: 2.1: Progress Progress towards towards transforming transformi Britain’sng powerBritain’s system, power highlighting system, the highlighting areas that are the under- areas and that overperforming are under- relative and over- to near-termperforming targets relative for decarbonisation. to near-term Each target areas for is reviewed decarbonisation. later in this section Each area is reviewed later in this section.

The UK’s carbon budgets require major Demand response from commercial and decarbonisation of energy supply. In the near industrial sites is already active, but the large future, virtually all electricity must come from domestic resource (e.g. smart appliances such clean sources. Large scale use of intermittent as fridges and washing machines) cannot be renewables will require extensive flexibility tapped without rollout of smart meters. options for balancing. Energy bills may be higher than today Many options exist: interconnection, storage, regardless of power sector transformation, due demand side response and flexible generation; to rising fossil fuel and carbon prices. However, so consumers should not see any difference in large cost reductions in key technologies such terms of supply quality. as renewables, batteries and hydrogen suggest 17 that regions which can take advantage of these The current pathway relies heavily on wind and (through electric vehicles and heat pumps) solar power, driven by the large cost reductions could see the cheapest energy. they have experienced. If these intermittent renewables continue to dominate future Renewables have led to job creation, especially electricity supply, the location of power in poorer regions. Scottish renewables have generation will change and the economic created a strong new industrial sector. Job activity that comes with it – favouring rural and losses in the legacy fossil-fuel sectors are offset coastal areas. by growth in renewable industries. The dispersed nature of renewables means that the The roll-out of smart meters is taking place at jobs created in construction, operation and very different speeds across Britain. Wales is maintenance are in more remote areas, giving a leading whereas London is lagging. The welcome employment boost. structure of the housing sector is a strong influence: lower home ownership places some regions at a disadvantage.

2.1 Current status and future targets for the power sector The following section will give a detailed analysis on the current status of the power sector, and how it is progressing against its targets. Overall the sector is on track to

16 The Power System

2.1 Current status and future targets for the power sector

The following section will give a detailed analysis on the current status of the power sector, and how it is progressing against its targets. Overall the sector is on track to achieve three out of the six targets examined for this research (with three being well on track) (Figure 2.1). Further, it is falling behind on three other targets. The effects of progress towards each target are not directly comparable, in that achieving some

targets will have greater effects 1 on the energy transformationFigure 2.2: DevelopmentFigure 2.2: of Development the generation of the migenerationx and total mix and power total generationpower generation between between 2009 2009 and and 2017. 2017. 1 than others. Therefore, this These changes have led to a redistribution of generators around Britain. The closure These changes have led to a redistribution through conversion or the investment in barometer (Figure 2.1) givesof coal power plants nearer to the load centres in England and Scotland on the one an indicative understanding on of generators around Britain. The closure renewables may help to ease the transition. side has been offset by the construction of renewables in Scotland, the South West how the sector is progressing. of coal power plants nearer to the load Additional discussion on the of England and Wales. The total installed capacity of renewables is highest is centres in England and Scotland on the one topic can be found in 2.2. Scotland and Wales, with a relatively homogenous distribution of renewable The island location of GB creates a side has been offset by the construction unique challenge for the power systemcapacity throughof renewables England. in Scotland, the South West when compared to its continental of England and Wales. The total installed The West Midlands, the North East and London stand out as having little capacity, European counterparts. This shows in the capacity of renewables is highest is Transforming the energy due to population density and resource availability. A similar picture is visible when increased balancing needs to maintain Scotland and Wales, with a relatively system affects the locations of looking at the installed capacity of renewables per capita where Scotland and Wales system stability. The need for flexibility is homogenous distribution of renewable generators and so redistributes disproportionally larger when comparedare leading andcapacity equal through in value. England. Both have about twice theeconomic capacity and installed employment as the to highly interconnected systems. rest of Britain, which raises a challenge for the grid to cope acrosswith the the redirected regions. flow of electricityThe and West may Midlands, require the investments. North East and London stand out as having little generation Figure 2.3 shows distribution of power stations by generator type. The last capacity, due to population density and The GB power systemremaining coalresource stations availability. are located A similar inpicture Yorkshire, thePrevious Midlands, closures the of North coal stations West inand the 2 has proven that electricityWales. Theseis visiblestations when are looking due at to the be installed closed no laterWest than Midlands 2025, have apart left the from region Drax almost generation can change rapidlypower stationcapacity in Yorkshire, of renewables where per capitafour ofwhere its six unitsentirely have reliant been on electricityconverted imports to use in a short time span.biomass insteadScotland of andcoal. Wales The are energyleading and system transitionfrom other will regions, alter duethe to location the lack of of power stationsequal and in value. a redistribution Both have about of twice economic activitylocal renewable and employment generation capacity. in the country. Thisthe capacityraises installedthe question as the rest how of to best Conversely,facilitate Scotlandthe energy invested systemheavily transition, notBritain, only which in raises te rmsa challenge of energy for the systemin onshoreissues wind but before also its thermaleconomic fleet grid to cope with the redirected flow of were retired. This makes Scotland a The GB power system has demonstrateddevelopment and employment. Retaining large parts of the workforce through that carbon reduction by overhauling the electricity and may require investments. substantial exporter of electricity. Wales conversion or the investment in renewables may help to ease the transition. generation mix is possible in a very short hosts large hydro power stations (legacy Additional discussion on the topic can be found in Section 0. time. The introduction of a carbon floor price Figure 2.3 shows distribution of power renewables), masking the relatively slow Iain Staffell 28/10/18 21:46 and clean air legislation has reduced the use stations by generator type. The last progress of its energy transition. Comment [2]: Needs to be fixed. of coal power plants by five-sixths in the remaining coal stations are located in 18 The Power System last 5 years. At the same time, significant Yorkshire, the Midlands, the North West and amounts of wind, solar and bioenergy Wales. These stations are due to be closed have entered the power system and gas no later than 2025,2 apart from Drax generation has seen a renaissance. Nuclear power station in Yorkshire, where four of power has maintained its share of the mix in its six units have been converted to use the past decade. However, based on current biomass instead of coal. The energy system projections, it is likely that replacements will transition will alter the location of power not outweigh closures in the coming decade. stations and a redistribution of economic Figure 2.2 shows the generation share and activity and employment in the country. This total generation of all (major) generation raises the question how to best facilitate types for the last 9 years. The analysis is the energy system transition, not only in conducted at GB-level as Northern Ireland terms of energy system issues but also a A minimum price paid for the emission of CO2 which is part of the power system of Ireland. economic development and employment. consists of the EU-ETS (EU Emissions Trading Scheme) price component and an adjusted carbon tax to guarantee Retaining large parts of the workforce that the carbon price does not fall below 18 £/tCO2.

18 The installed base of renewable energy sources (RES) shows a concentration of biomass generation in Yorkshire and the North East. Solar power is predominant in the South West, South East and East Anglia. Onshore wind is mostly deployed in Scotland whereas offshore wind on the other hand is more evenly allocated around the coast of Britain and closer to the load centres, mainly connected to England. Generally speaking, wind and solar follow the resource availability within a tight framework of planning permission. Due to the topography, hydropower and pumped-hydro storage can only be found in Wales and Scotland and not in the rest of the country.

Figure 2.3: Location of power generation in Great Britain. Energy to waste plants are grouped with biomass.

Non-renewable thermal generation (coal, gas and nuclear) is more concentrated than renewable generation. Gas stations are more widely distributed throughout the country and located closer to the load centres. Coal is now restricted to central England and Wales. Nuclear power stations are all located on the coasts due to the volume of cooling water intake and security considerations.3

Interestingly, the West Midlands and Greater London no longer have any large scale thermal generation. The transition from coal to gas fired power stations sees a shift away from typically slow-ramping base load power plants to more flexible (combined cycle) gas turbines, fewer operating hours for the residual generators and variable output over time.

Figure 2.4: Regional distribution of power stations in Great Britain, showing renewable (top row) and conventional (bottom row). Hydro plants are not shown, these are all concentrated in Wales and Scotland

2.1.12.1.1 Carbon Carbon intensity intensity

FigureFigure 2.5: 2.5: Barometer Barometer for gridgrid electricity electricity carbon carbon intensity. 4 intensity.Above:4 national progress; Top Right: map of the amount of installed low-carbon power generating capacity per person. Above: national progress; Right:The map reduction of the amount of coalof installed has ledlow-carbon to a strongly power Despite the rapid success of decarbonisation, generating capacity per person. decreasing carbon intensity of the produced additional effort is necessary as further electricity between 2009 and 2018. This is decarbonisation will be more challenging4,c. Thedue reduction to the lower of carboncoal has content led to of anatural strongly The rapid progress in the last five years Further increases in the CO2 price are likely to be necessary to build momentum on decreasinggas when compared carbon to hard intensity coal. of the makes up for the previous decade of zero further decarbonisation of power generation.5 Despite this, the shift towards low produced electricity between 2009 and progress on decarbonising electricity. Britain carbon technologies is likely to be more challenging and not as rapid as the phase- 2018. This is due to the lower carbon is therefore just about on track – but emissions out of coal. Further decarbonisation will require building new generators rather than contentThe of naturalcarbon gas intensity when comparedof grid to must continue to fall at 7.5% per year. 6 hardelectricity coal. has more than halved simply redeploying existing ones. A recent uptake of the European carbon price within five years after the (EU-ETS)There are to many over technologies €20 (£18) for perachieving tCO2 should provide a stable environment outside introduction of the carbon floor this, wind, solar, biomass, new nuclear The carbon intensity of grid the country-specific carbon floor price policy instruments. price and emissions Directives. build, and power stations equipped electricity has more than halved Further decarbonisation however Additionalwith carbon policy capture support use and is storage required to keep the rate of decarbonisation at the same within five years after the will prove more challenging. pace.(CCUS). For Toexample, keep further the decarbonisation application of carbon capture, utilisation and storage introduction of the carbon floor (CCUS)affordable technology it is necessary to captureto assess theCO 2 emissions from gas-fired and biomass power price. Further decarbonisation plantssuitabilityb is stillof all inlow itscarbon infancy generators, and it is uncertain whether the technology will be however will prove more based on their levelised cost of energyd delivering the necessary CO2 intensity reductions for the power sector. The need for challenging. The carbon intensity of grid electricity peaked decarbonisationas well as the system using integration CCUS has cost, seen a renewed support commitment in the Clean in 2012 at 508 g/kWh and has since more than including those technologies that do not Growth Strategy7 by the Government as well as from private entities, albeit timings Thehalved carbon to 237 intensityg/kWh. This ofchange grid came electricity at a receive policy support at the moment. are tight to deliver at scale in 2030s for large CO2 reductions. peakedremarkable in 2012 speed after at 508 the introduction g/kWh and of a has

sincecarbon-floor more than price halvedof 18 £/tCO to2 transformed 237 g/kWh. Thisthe change economics came of coal at power a remarkable stations and speed afterenabled the their introduction rapid phase-out. of a carbon-floor

price of 18 £/tCO2 transformed the

economicsFurther increases of coal in the power CO2 price stations are likely and enabledto be necessary their rapid to buildphase-out. momentum on further decarbonisation of power generation.5 Despite this, the shift towards low carbon

technologies is likely to be more challenging 22 The Power System and not as rapid as the phaseout of coal.

Further decarbonisation will require building new generators rather than simply redeploying existing ones.6 A recent uptake of the European carbon price (EU-ETS) to over

€20 (£18) per tCO2 should provide a stable environment outside the country-specific Figure 2.6: DevelopmentFigure 2.6: Development of carbon ofintensity carbon intensity of the electricity of the electricity grid grid in Greatin Great Britain. Britain. 1,8 carbon floor price policy instruments. Despite the rapid success of decarbonisation, additional effort is necessary as 4,c Additional policy support is required to keep further decarbonisation will be more challenging . The rapid progress in the last the rate of decarbonisation at the same five years makes up for the previous decade of zero progress on decarbonising pace. For example, the application of carbon electricity. Britain is therefore just about on track – but emissions must continue to capture, utilisation and storage (CCUS) fall at 7.5% per year.

technology to capture CO2 emissions from b gas-fired and biomass power plantsb is still in Coal generation will be phased out by 2025. c For the estimation of today’s target a linear interpolation between the start date in 2012 and the end date in 2020 its infancy. The need for decarbonisation is assumed as this would best utilise assets and staff for the roll-out.

using CCUS has seen a renewed support commitment in the Clean Growth Strategy7 Energising Britain 23

by the Government as well as from private

entities, albeit timings are tight to deliver at b Coal generation will be phased out by 2025. c For the estimation of today’s target a linear interpolation scale in 2030s for large CO2 reductions. between the start date in 2012 and the end date in 2020 is assumed as this would best utilise assets and staff for the roll-out. d Cost of electricity generation at the source, disregarding all other costs.

2.1.22.1.2 Interconnection Interconnection

Figure 2.7: Barometer for interconnector capacity. 4 Above: national progress; Below Right: Past, present and future development of interconnectors.9

Britain is an island system with limited 4 Figure 2.7: Barometer for interconnector capacity. connections to neighbouringTop: national progress. countries, and 9 so traditionally strugglesRight: Past, with present security and future of development of interconnectors. supply issues relative to continental Britain is an island system with limited Europe. Virtually all of Britain’s balancing connections to neighbouring countries, and capabilities must be sourced from within the so traditionally struggles with security of system. This has negative impacts on balancing costs,supply as large capital-intensive issues relative to continental plants have to remainEurope. in standby Virtually mode. all of Britain’s balancing capabilities must be sourced from within the system. This has negative impacts on Interconnectorbalancing capacity costs, is as large capital-intensive set to moreplants than have quadruple to remain in standby mode. in the near future.

Interconnector capacity is set to more than quadruple in the near future, easing the challenges of The availability of interconnectors allows sharing of some of the balancingintegrating tasks with renewables. neighbouring energy systems. Technically speaking this meansThe that availability power plants ofoutside interconnectors allows the British systemsharing can provide of energy some to ofthe the balancing tasks GB system and vicewith versa neighbouring to account for energy systems, thus outages or the intermittencyoptimising of renewables. the allocation accuracy of Conversely they assets.can increase Technically strain on the speaking this means system during stress events which affect the that power plants outside the British two connected markets. system can provide energy to the GB system and vice versa to account for The relatively low interconnection capacity outages or the intermittency of to Britain is due to the high cost of building however these are competing interconnector Energising Britain 25 under-sea cablesrenewables. and the fact projects and are not all likely be realised.

interconnectors cannot be viewed as firm Having a wide-ranging portfolio of The low interconnection capacity to Britain is due to the high cost of building undercapacity or provide the same system interconnectors to different countries may sea cables. The drive for better asset utilisation and renewables integration has led services as synchronous power stations. benefit the energy system, as they can be The drive for betterto theasset construction utilisation and of interconnectors.used to balance Furt renewableher expansion energy sources is under construction or in renewables integrationfinal planning has led to thestages, all ofacross which large are distances due to and be mayoperational reduce by 2022. The increase construction of interconnectors.from currently Further 4.2 GW (2018)costs for to consumers 17.8 GW through (2022) the isbenefits more than quadrupling the expansion is undercapacity construction in a orshort in final time period.of trade[ii]. One An note unbalanced of caution portfolio is necessary for the projects in planning stages,planning, all of which are as due the to UK be may exposes leave theboth energy European systems Single to each Energy Market which could operational by 2022.change The increase the economics from ofother’s interconnector specific risks and projects, does not allow potentially leading to the currently 4.2 GWcancellation (2018) to 17.8 ofGW the (2022) projects for10. economic optimisation. is more than quadrupling the capacity in a short time period. One note of caution is The barometer indicates that interconnection

necessary for the26 projects in planning, as the capacity is falling behind the target for 2030. The Power System UK may leave the European Single Energy However, considering the planned upgrades Market which could change the economics in the next 5 years, the development of of interconnector projects, potentially interconnectors is within the target corridor leading to the cancellation of the projects[i]. despite the barometer’s indication. A regional barometer is not presented If realised, these interconnectors provide a as interconnection is a country-to- large but unreliable increase in system country issue. flexibility and allow RES balancing with continental Europe and Scandinavia. Further expansion beyond 2030 is envisaged,

2.1.32.1.3 Storage Storage

Figure 2.8: Barometer for storage deployment. Top: national progress; Above: regional progress; Top Right: map of location and type of storage.

In total 3.7 GW of storage is active in the factors are applied. This helps to accelerate GB power system, of which 2.9 GW the cost decline of grid-scale storage until is pumped hydro, 0.8 GW is batteries eventually it can serve high-volume but (primarily lithium-ion), 0.4 GW is mechanical lower-yield markets economically. The GB (flywheels) and the rest is thermal storage capacity marketg, has in some cases helped (liquid air and hot water storage). to foster the uptake of storage. However, the dependency on specific market rules creates uncertainties for long-time investments14. The stock of storage is dominated by pumped-hydro The barometer indicates that storage storage and new batteries deployment is close to being on track. added in the last year. However, one needs to consider the reliance of storage on markets with specific rules. If these were to change, the deployment of storage might take a downturn. Batteries and other modern storage Additionally, a supportive environment must technologies are still dependent on specific be maintained into the future as batteries market rules for economic viability. With the are short-lived relative to pumped hydro recent increase in RES penetration and the (e.g. 10-20 rather than 60 plus year lifetimes) goal to reduce thermal ‘must-run’ capacity and so must be repowered at end of life. for the delivery of ancillary services, National Grid has encouraged demand-side response (DSR) and storage to participate in the

28 ancillary services marketse but still finds The Power System

itself overwhelmingly dependent on thermal generation.

The GB power system has less storage than most neighbouring countries due to geographical constraints. Until the mid-2010s the only economical storage technology was pumped hydro which requires mountains, and thus is concentrated in Wales and Scotland. These still make up the largest share of storage capacity. Figure 2.9:Figure Installed 2.9: storageInstalled capacity storage capacityin the GB in power the GB system. power13 system.,f 13,f The recent and rapid cost reduction in other storage technologies12 means that Storage has so far been applied in ancillary services markets, which are high value, new systems are becoming more widely but low volume markets. In particular, battery storage can be fully used, making it deployed, with small scale, rapid dispatch economically viable in these markets. This helps to accelerate the cost decline of lithium-ion batteries contributing the grid-scale storage until eventually it can serve high-volume but lower-yield markets g largest share of the new market entrants. economically. The GB capacity market , has in some cases helped to foster the uptake of storage. However, the dependency on specific market rules creates uncertainties for long-time investments14. Storage has so far been applied in ancillary e Ancillary services are procured by National Grid to maintain services markets, which are high value, but low The barometer indicates that storage deploymentthe system stabilityis close and they to include being e.g. onfrequency track. volume markets. In particular, battery storage However, one needs to consider the reliancesupport, of storage voltage support, on markets black start withamongst specific others. f Additional storage locations have been added to the initial can be used, making it economically viable in rules. If these were to change, the deploymentsource of to storage provide an might up-to-date take picture. a downturn. g these markets but only when generous derating Additionally, a supportive environment must Market be formaintained the long-term procurement into the of generationfuture as capacity. batteries are short-lived relative to pumped hydro (e.g. 10-20 rather than 40-60 year lifetimes) and so must be repowered at end of life. 22

f Additional storage locations have been added to the initial source to provide an up-to-date picture. g Market for the long-term procurement of generation capacity.

30 The Power System

2.1.42.1.4 Network Network andand transmissiontransmission capacity capacity expansion expansion

Figure 2.10: Barometer for transmission capacity. 9,h Top: national progress; Above: regional progress; Top Right: map of current status.

Grid expansion is necessary to transport the unitary regions will have to double up until electricity between the locations of 2050. The transmission capacity within the generation and consumption. Generator regions is not assessed by the data sources. locations are changing due to the shift from fossil to low-carbon generators, but this Regionally the grid connection reinforcement also changes the generation pattern away needs differ largely. The East of England from a more constant use of transmission faces a five-fold increase in grid capacity lines towards more intermittent utilisation. which is needed for the transport of electricity from offshore wind farms to the load centres in the region. The grid in the North East will Relocation of generators need to triple its grid transmission capacity and the shift towards by 2040 to cope with the increasing amount renewables requires of Scottish wind power as well as the a doubling of grid possible connection of offshore wind farms transmission capacity. in the near future. Yorkshire will have to double its capacity for the same reasons.

The East Midlands has the second highest There are significant risks to the expansion transmission capacity and therefore does of the electrical network. It may face the risk not require the rapid growth of other of opposition from local residents and regions further north. Large parts of today’s tackling such challenges is a major societal grid congestion in Great Britain happens

task if we are to proceed with a low-carbon in Scotland, with grid reinforcement Energising Britain 31 transition in the power sector. requirements. Additionally, potential future

nuclear power plants could increase the Assessing the transport capacity at the grid congestion already happening in borders of the unitary regions allows potential Scotland. The siting of wind turbines at shortfalls in transmission capacity to be the best wind resource locations does localised. Scotland is currently facing the not coincide with pre-existing location greatest shortfall and portraying it as one of the grid which lead to frequent grid unitary region might not accurately cover congestion due to under-sizing of the grid. the full grid expansion needs. Assuming that grid congestion does not occur within There are significant risks to the expansion the region is essentially oversimplifying the of the electrical network. For example, it issues in some cases, as Scotland does may face the risk of opposition from local not have limitless internal transmission residents and tackling such challenges is a capacity. Grid congestion already occurs major societal task if we are to proceed with in Scotland, especially as wind power a low-carbon transition in the power sector. plants are typically located in the more rural areas, some of which were already troubled by weak grid connections.

The barometer shows good progress if we assume the already well-developed grid as the current state. If this is used as a starting point the actual progress of expansion is very h For individual regions the required transmission capacity is higher in the transition phase up to 2040, which is used in little. Transmission capacity at the borders of this case.

2.1.52.1.5 Smart Smart meter meter roll-out roll-out

15,16,i Figure 2.11: Barometer for smart meter roll-out. 15,16,i FigureTop: 2.11:national Barometer progress; Above:for smart regional meter progress; roll-out. Top Right: map of current share of houses with smart meters. Top: national progress; Above: regional progress; Right: map of current share of houses with smart meters. The availability of smart metering is seen smart meter with reduced functionality Theas availabilityone of the key of enablers smart meteringof a smarter is and seen as(e.g. not working after supplier change onemore of balancedthe key grid enablers through theof uptakea smarter of andwithout intervention) SMETS2 is the latest moresmall-scale balanced demand grid side through response the (DSR). uptake ofgeneration, with connection to the smart small-scaleA country-wide demand roll-out side of smart response meters (DSR).is Ameter gateway. Currently, there are only a country-wideenvisaged by 2020.roll-out This targetof smart is conditional, meters isfew use-cases for smart meters and a lack envisagedin that every byproperty 2020. needs toThis be offeredtarget isof offerings from the electricity suppliers. The a smart meter by 2020 but the owners are initial vision that smart meters will enable conditional, in that every property needs to under no legal requirements to accept. DSR services to the grid has yet to fully be offered a smart meter by 2020 but the materialise at the domestic consumer level. owners are under no legal requirements to

accept. The smart-meter rollout Non-domestic smart meters account for faces several challenges and about 1% of the total numbers17. However, Thesignificant smart-meter regional rollout facesvariation. several the installed capacity behind those meters challenges and the target will not be is much higher and likely to be more readily met at the current rate of deployment. available to provide DSR services.

VaryingVarying success success can bebe observed observed in the in the roll- out,rollout, with with Wales Wales leading leading and and London lagging. lagging.

i For the estimation of today’s target a linear interpolation between the start date in 2012 and the end date in 2020 is assumedPossible as this reasons would bestfor thisutilise may assets be and staff for the roll-out. socioeconomic effects (e.g. tenancy 34 The Power System structure) and technical challenges (e.g. access to meter).

The target for a complete roll-out by 2020 will not be met without rapid acceleration. Only a third of households currently have a smart meter. The current pace would not see roll-out finishing until towards 2040. This would prevent the uptake of time of usage tariffs with higher temporal resolution (e.g 30 minute settlement periods) and domestic DSR services in the near future. This could have knock-on effects such as increased costs for the consumers.

The Automated Meter Reading (AMR) is a i For the estimation of today’s target a linear interpolation legacy infrastructure for larger electricity between the start date in 2012 and the end date in 2020 is assumed as this would best utilise assets and staff for the customers. SMETS1 is the first generation roll-out.

24 Possible reasons for this may be socio- economic effects (e.g. tenancy structure) and technical challenges (e.g. access to meter).

Various challenges are faced by the roll-out. Some are related to use of different types of smart meters, with some of them “smarter” than others, boasting additional functionality between the three types of smart meter – AMR, SMETS1 and SMETS2. The Automated Meter Reading (AMR) is a legacy infrastructure for larger electricity customers. SMETS1 is the first generation smart meter with reduced functionality (e.g. not working after supplier change) SMETS2 is the latest generation, with connection to the smart meter gateway. Currently, there are only a few use-cases for smart meters and a lack of offerings from the electricity suppliers. The initial vision that smart meters will enable DSR services to the grid has yet to materialise at the domestic consumer level.

Non-domestic smart meters account for about 1% of the total numbers17. However, the installed capacity behind those meters is much higher and likely to be more readily available to provide DSR services.

2.1.62.1.6 Demand Demand side responseresponse

FigureFigure 2.12:2.12: BarometerBarometer for for demand smart side meter response. roll out.4, 20,4,18, 21 j

Demand side response (DSR) could enable buildings to intelligently reduce their Demand side response (DSR) could be participating in various markets. This demand at peak times, mitigating the need for additional power generation enable buildings to intelligently reduce constitutes an over-achievement with capacity. DSR services at the domestic level are mostly limited to legacy Economy 7 their demand at peak times, mitigating regards to the targets laid out by National the need for additional power generation Grid. However, there is uncertainty whether j Note that no location-specific data is available, so a regional barometer cannot be produced. capacity. DSR services at the domestic the reported capacity is correct; the

Energisinglevel are mostly Britain limited to legacy Economy same physical units can be accredited 35 7 (and 10). The electric loads of a typical in different ancillary services markets household in Britain with gas supply and may be double-counted. If this is for heating usually do not warrant the the case, it would prove that actors are aggregation in DSR schemes; the loads are optimising their participation in the market just too small to be economically viable. and reacting to price signal as intended.

Ultimately, the DSR potential with industrial The smart meter roll-out and corporate consumers is high, but has yet to produce demand it takes a compelling business case to side response capacity from exploit it. As DSR must compete with households. Industrial and other flexibility options, saturation may be corporate consumers are reached at lower single-digit GW levels due actively providing these to diminishing returns in the market and services already though. increasing effort of connecting consumers at decreasing unit sizes. For price-sensitive industrial and commercial DSR providers, this saturation will happen where the cost Some energy suppliers now offer ‘smart of connection and potential gains offset the tariffs’ for households with electric risk of e.g. lost production in the factory. vehicles and heat pumps. These first Increasing awareness of the benefits of DSR, market entrants, however, do not make decreasing connection costs and higher full use of the smart meter infrastructure. intermittency will change this equilibrium DSR activity that couples these together and add additional capacity to the system. may at first be limited to smart charging, rather than responding in real time.

Further cost reductions in ICTk infrastructure and integration of car-based and personal device communication plus aggregation means that we are likely to see domestic DSR developing. The ongoing digitalisation could see the use of artificial intelligence (AI) to predict users’ behaviour and adjust the energy consumption without a noticeable interruption for the consumer. The use of smart meters may reduce the costs for the consumers when DSR services are provided. However, this will be further down the transition pathway as currently economic benefits are negligible19.

On the industry and commercial side, DSR aggregators are active in the market. The high cost of communication infrastructure still makes them reliant on the high value and low volume opportunities, such as frequency response markets. Currently about 2300 MW of DSR is reported to k Information and communications technologies.

2.2 Implications of a transitioning power sector Overall employment in the conventional energy sector has been steady at around 175,000 since the mid-1990s, after a large decline as the phase-out of coal mining 2.2 Implicationscost more of than a 300,000transitioning jobs. Around 80,000 jobs power are directly associated sector with non- renewable electricity generation in recent years. Overall employment in the conventional energy sector has been steady at around 175,000 since the mid-1990s, after a large decline as the phase-out of coal mining cost more than 300,000 jobs. Around 80,000 jobs are directly associated with nonrenewable electricity generation in recent years.

Investment in renewable energy sources creates more jobs per MWh produced than

the thermal generation industry (including 20 Figure 2.13:Figure Employment 2.13: Employment in the in non-renewables the non-renewables energy energy industry.industry. 20 nuclear)21. An annual share of 75% of the electricity in Britain was generated by Investment in renewable energy sources creates more jobs per MWh produced than the non-renewable generators in 2017, the thermalFigure 2.14generation shows how industry the employment (including in nuclear)21. An annual share of 75% of maintaining around 80,000 jobs. The the electricitythe renewables in Britain sector wasis distributed generated across by the non-renewable generators in 2017, share of electricity from renewables (wind,maintaining Great Britain.around The 80,000 employment jobs. numbers The share of electricity from renewables (wind, solar, bioenergy, hydropower was about for all of England are split using investment solar, solar, bioenergy, hydropower was about 25% in 2017. This economic activity 25% in 2017. This economic activity announcements by companies22,l. Wales supports about additional 34,000 jobs. The expansion of renewables therefore has a supports about additional 34,000 jobs. and Scotland employment numbers are small net positive employment effect. The effect is substantially larger when The expansion of renewables therefore has taken from the ONS survey directly20. a small net positive employment effect. hydropowerMost notably, is removed. Yorkshire Additionally, is hosting a large the employment growth is typically located in The effect is substantially larger when more ruralnumber areas, of jobs, following which can the be changesexplained in location of electricity generation. hydropower is removed. Additionally, the with the presence of Drax power station as Figure 2.14 shows how the employment in the renewables sector is distributed employment growth is typically located in well as with being a major hub for offshore across Great Britain. The employment numbers for all of England are split using more rural areas, following the changes wind power. For example, the Siemens- investment announcements by companies22,l. Wales and Scotland employment in location of electricity generation. Gamesa blade manufacturing for large 20 numbersoffshore are windtaken turbines from is locatedthe ONS in Hull. survey directly . Most notably, Yorkshire is hosting a large number of jobs, which can be explained with the presence of Drax

l This data set was gathered back in 2012. However, it is still believed to be the most accurate proxy for job locations.

Energising Britain 39

Figure 2.14: Employees in renewable electricity generation l This data set was gathered back in 2012. However, it is still per region. Data split within England based on DECC believed to be the most accurate proxy for job locations. data.20,23

26 2.3 References

1 Electric Insights (2018): www.electricinsights.co.uk 14 Castagneto-Gissey, G. et al. (2016): Regulatory Challenges to Energy Storage Deployment – An Overview of the UK Market. 2 BEIS (2018): Implementing the end of unabated coal by 2025. http://www.restless.org.uk/documents/working-paper-1.pdf assets.publishing.service.gov.uk/government/uploads/system/ uploads/attachment_data/file/672137/Government_Response_ 15 BEIS (2018): Smart meter statistics – Quarter 1, 2018, Great to_unabated_coal_consultation_and_statement_of_policy.pdf Britain. www.gov.uk/government/collections/smart-meters- statistics 3 Grimston, M. et al (2014): The siting of UK nuclear reactors. Journal of Radiological Protection. 34 R1. 16 ElectraLink (2018): Monthly Smart Meter Installs. http://iopscience.iop.org/article/10.1088/0952-4746/34/2/R1/pdf www.electralink.co.uk/services/energymarket-insight/monthly- smart-meter-installs/ 4 National Grid (2018): Future Energy Scenarios 2018, www.fes.nationalgrid.com 17 BEIS (2018): Smart meter statistics – Quarter 1, 2018, Great Britain. www.gov.uk/government/collections/smart-meters- 5 The Times (2018). Old king coal is back as gas costs rise. statistics www.thetimes.co.uk/article/old-king-coal-is-back-as-gas-costs- rise-g2zvhclxd 18 National Grid (2017): Non-BM Balancing Services Volumes and Expenditure. www.nationalgrid.com/sites/default/files/documents/ 6 I.A.G. Wilson and I. Staffell (2018). Rapid fuel switching from coal Non-BM%20April%20-%20September%202017_0.pdf to natural gas through effective carbon pricing. Nature Energy, 3, 365–372. 19 The guardian (2018): Smart meters to save UK households only £11 a year, report finds.www.theguardian.com/ 7 UK Government (2018): Clean growth strategy. environment/2018/jul/21/smart-meters-to-save-uk- www.gov.uk/government/publications/clean-growth-strategy householdsonly-11-a-year-report-finds 8 Committee on Climate Change (2015): Power sector scenarios for 20 Office for National Statistics (2017): UK Environmental Accounts: the fifth carbon budget.www.theccc.org.uk/wp-content Low Carbon and Renewable Energy Economy Survey: 2016 final uploads/2015/10/Power-sector-scenarios-forthe- fifth-carbon- estimates. https://www.ons.gov.uk/economy/ budget.pdf environmentalaccounts/bulletins/finalestimates/2016 9 National Grid (2017): Electricity Ten Year Statement 2017 – 21 Jacobson, M. (2017): 100% Clean and Renewable Wind, Water, Network development needs assessment (ETYS2017). and Sunlight All-Sector Energy Roadmaps for 139 Countries of the www.nationalgrid.com/sites/default/files/documents/14843_NG_ World. Joule, 1(1), 108-121 ETYS_2017_AllChapters_A01_INT.pdf 22 DECC (2011): Renewables Investment and Jobs. assets. 10 J. Geske, R. Green and I. Staffell, 2018. Elecxit: The Cost of publishing.service.gov.uk/government/uploads/system/uploads/ Bilaterally Uncoupling British-EU Electricity Trade. attachment_data/file/66200/5937-renewables-investment-and- 11 R. Green, D. Pudjianto, I. Staffell and G. Strbac, 2016. Market jobs-map-1-april-2011-.pdf design for long-distance trade in renewable electricity. The Energy 23 DECC (2012): Renewables Investment and Jobs. Journal, 37, 5–22. https://blogs.wwf.org.uk/wpcontent/uploads/decc_renewable_ 12 O. Schmidt, A. Hawkes, A. Gambhir and I. Staffell, 2017. The future investment_and_jobs.png cost of electrical energy storage based on experience rates. Nature Energy, 2, 17110.

13 REA (2015): Energy Storage in the UK - An Overview. https://www.r-ea.net/upload/rea_uk_energy_storage_report_ november_2015_-_final.pdf

27 Section 3: Energy in transport

The overall barometer for transport shows a mixed view. Targets for the electrification of private car and public bus transport are on-track, along with the infrastructure required for charging these vehicles. However, it will require a large ramp up in deployment of these technologies in the near future to stay on-track.

The story for the sector’s transition At an aggregated, national level EV charger EV owners in Wales, Scotland and the looks worse for hydrogen deployment, deployment appears to be on target to North East face the greatest additional heavy duty transport and rail emissions. deliver enough charging points for the financial burden, relative to average Deployment numbers and GHG emission projected EV uptake. However, there is income, when switching to battery reductions in these areas are behind where regional and intraregional clustering of electric and plug-in hybrid vehicles. they need to be. Technologies that could these charging points, which will result benefit these applications are not onin shortages and access problems in Rail emissions are currently not on track track to have the infrastructure in place. some areas. The electricity network to achieve decarbonisation targets, and implications of charging infrastructure progress will likely fall further behind as Transport is behind in reaching its also require significant investment. electrification projects are being abandoned. GHG emissions target meaning large transformations (e.g. electrification) are Total cost of ownership (TCO) calculations required to achieve the 2030 climate targets. show that in London battery EVs are Electric vehicle (EV) sales are ramping less expensive than diesel or petrol up, but the current 0.4% fleet penetration vehicles. The regional variation in will need to become 27% by 2030. TCOs is linked to the average distance travelled by private vehicle per year per region and, to a lesser extent, regional variation in fuel and electricity prices.

3 Section 3: Energy in transport

FigureFigure 3.1:3.1: Progress Progress towards towards transforming transforming Britain’s Britain’s transport system,transport highlighting system, the highlighting areas that are the under- areas and that over-performing are under- and over-performingrelative to near-term relative targets forto decarbonisation.near-term targets Each for area decarbonisation. is reviewed later in thisEach section. area is reviewed later in this section.

The overall barometer for transport shows a will result in shortages and access problems in mixed view. Targets for the electrification of some areas. The electricity network implications private car and public bus transport are on-track, of charging infrastructure also require significant along with the infrastructure required for charging investment. these vehicles. However, it will require a large ramp up in deployment of these technologies in Total cost of ownership (TCO) calculations show the near future to stay on-track. that in London battery EVs are less expensive than diesel or petrol vehicles. The regional variation in 28 The story for the sector’s transition looks worse TCOs is linked to the average distance travelled by for hydrogen deployment, heavy duty transport private vehicle per year per region and, to a lesser and rail emissions. Deployment numbers and GHG extent, regional variation in fuel and electricity emission reductions in these areas are behind prices. where they need to be. Technologies that could benefit these applications are not on-track to have EV owners in Wales, Scotland and the North East the infrastructure in place. face the greatest additional financial burden, relative to average income, when switching to Transport is behind in reaching its GHG emissions battery electric and plug-in hybrid vehicles. target meaning large transformations (e.g. electrification) are required to achieve the 2030 Rail emissions are currently not on track to climate targets. achieve decarbonisation targets, and progress will likely fall further behind as electrification projects Electric vehicle (EV) sales are ramping up, but the are being abandoned. current 0.4% fleet penetration will need to become 27% by 2030.

At an aggregated, national level EV charger deployment appears to be on target to deliver enough charging points for the projected EV uptake. However, there is regional and intraregional clustering of these charging points, which

42 Transport

3.1 Current status and future targets in transport The energy transition in the transport sector has been relatively slow and limited. In 2004, renewable energy (biofuels and electricity) made up less than 1% of all transport energy. By 2016, this figure stood at 3.5%1. The transport sector

3.1 Current statusgenerated and 115 MtCO 2e in 2015, accounting for 24% of total emissions (Figure 3.2). Of this, surface transport makes up 95% of these emissionsa. This coupled with future targets incurrent transport technological innovation suggests that surface transport has the greatest scope for an energy transformation within the transport sector. The remainder of this section will provide a detailed analysis of the current state of the surface transport sector, and how it is progressing against energy transition targets. The focus will be on road transport, as opposed to rail, as this accounts for around 90% of GHG emissions and passenger kilometres.

The energy transition in the transport sector has been relatively slow and limited. In 2004, renewable energy (biofuels and electricity) made up less than 1% of all transport energy. By 2016, this figure stood at 3.5%1. The transport sector generated 115

MtCO2e in 2015, accounting for 24% of total emissions (Figure 3.2). Of this, surface transport makes up 95% of these emissionsa. This coupled with current technological 2 innovation suggests that surface FigureFigure 3.2: 3.2: Total Total GHG GHG emissionsemissions by transport mode mode in in Britain Britain from from 2008-2015. 2008-2015.2 transport has the greatest scope for an energy transformation within the The future sees a transition in transport where GHG emissions are halved, EVs account for 27% of the personal vehicle fleet, electric charging and hydrogen transport sector. The remainder of The future sees a transition in transport Other options include biofuels and synthetic refuelling infrastructure support the changing vehicle fleet, and rail emissions this section will provide a detailed where GHG emissions are halved, EVs fuels, which will likely play a role in the decreaseaccount by for a 27% quarter, of the all personal by 2030. vehicle Air quality concernstransition, and especially national in the climate short-term, targets but analysis of the current state of the are the main drivers of this transition, resulting in a variety of low-carbon options, fleet, electric charging and hydrogen remain outside the scope of this study. The surface transport sector, and how it such as electrification and hydrogen. Other options include biofuels and synthetic refuelling infrastructure support the transition up to 2030 will be mostly focussed is progressing against energy fuels, which will likely play a role in the transition, especially in the short-term, but changing vehicle fleet, and rail emissions on private-vehicles, with governments and transition targets. The focus will be remain outside the scope of this study. The transition up to 2030 will be mostly on road transport, as opposed to focusseddecrease on by private-vehicles, a quarter, all by 2030. with Airgovernments industry and industry already alreadyramping rampingup to achieve up to rail, as this accounts for around quality concerns and national climate future targets. Electrification of buses,

targets are the main drivers of this transition, heavy good vehicles and rail will be low 90% of GHG emissions and a For this research, transport focuses solely on surface transport (i.e. road and rail). Domestic aviation and shipping passenger kilometres. accountresulting for less in than a variety 5% of emissions of low-carbon from domestic options, transport. Internationaluntil 2030 avbutiation are and expected shipping areto achievenot included due suchto concerns as electrification over appropriate andcarbon hydrogen. accounting methodologieslarge and scalethe lack deployment of complete datasets. nearer 2050.

Energising Britain 43

a For this research, transport focuses solely on surface transport (i.e. road and rail). Domestic aviation and shipping account for less than 5% of emissions from domestic transport. International aviation and shipping are not included due to concerns over appropriate carbon accounting methodologies and the lack of complete datasets.

29 3.1.13.1.1 GHG GHG emissions emissions from transport transport

FigureFigure 3.3: 3.3: Barometer Barometer for for GHGGHG emissionemission reductions. reductions.3,4,5,63,4,5,6 Top: Top:national national progress; progress; Above: Above: regional regional progress; progress; Top Right: map of greenhouse gas emission reductions by region. Right: map of greenhouse gas emission reductions by region.

By By2030, 2030, surfacesurface transport transport emissions emissions should All regions in GB have decreased their not exceed 60 MtCO e. As emissions currently surface transport emissions relative to should not exceed2 60 MtCO2e. As stand at 111.8 MtCO e, there is still a 2008 (Figure 3.4). However, compared to emissions currently2 stand at 111.8 considerable amount of work required by 2010, the story changes, with only four MtCO2e, there is still a considerable this sector. regions decreasing or maintaining their amount of work required by this sector. emissions (Figure 3.3). This shows the relative importance the recession has played on The surface transport system is The surface transport system reducing surface transport emissions in GB isnot not reducing reducing emissions emissions fast fast since 2008. London, compared to both 2008 enoughenough to toremain remain on ontrack track to and 2010, shows the greatest decrease in tomeet meet its its 2030 2030 target. target. emissions likely related to efficiency gains in public transport, increases in active travel Progress against the 2030 and decreases in road kilometres driven. decarbonisation targets is unequal betweenProgress regions, against the with 2030 London and the Using decarbonisation as a proxy, the Northdecarbonisation West decarbonising targets is unequal the quickest regions of GB are undergoing energy andbetween the East regions, and Eastwith London Midlands and fallingthe the transitions at unequal rates. London has furthestNorth Westbehind. decarbonising This indicates the quickest that the decarbonised at the fastest rate, and energyand thetransition East and East in Midlands transport falling isthe not along with the North West has exceeded occurringfurthest behind.at the This same indicates rate that across the the the required emissions reductions to be energy transition in transport is not occurring on track to achieve the 2030 emissions country. at the same rate across the country. target. In contrast, the East and the East

Midlands are the furthest behind. These Compared to 2008, transport emissions regional inequalities could further be Energising Britain 45 have decreased by 3.7%, likely a result amplified if regions continue progressing of the global recession and improved at these speeds, suggesting that some vehicle efficiency, as opposed to an regions will be significantly further behind energy transformation or fuel switching. in the transport energy transition. During this same time, renewable energy

in transport increased by less than 1% Figure 3.4: Greenhouse gas emission reductions by region (2.8% in 2008 to 3.5% in 2016)1. Further, between 2008 and 2016.4 between 2010 and 2016, surface transport emissions increased by 1.1%. With 2016 2 emissions at 111.8 MtCO2e , significant decreases will be required to achieve 5 emissions below 60 MtCO2e by 2030.

30 3.1.23.1.2 Plug-in Plug-in vehicles vehicles in thethe carcar fleet fleet Iain Staffell 7/11/18 10:17 Comment [4]: Charts beyond this point are in Arial. Before this they were in Helvetica to match with the maps.

FigureFigure 3.5: 3.5: Barometer Barometer for for plug-in plug-in vehiclevehicle penetration. penetration.7,8,9 7,8,9 Top: Top: national progress; Above: Above: regional progress; Top Right: map of regional electric vehicle penetration. 7 national progress; regional progress; Plug-in vehicle growth has had a 60-fold increased since 2011 , resulting in their Right: map of regional electric vehicle penetration. increased share of newly sold vehicles, from 0% in 2008 up to 2% by 2018 (Figure Plug-in vehicles are still in their infancy, 3.6).Despite This recent growth growth, is likely plug-in a direct vehicle result of EVs becoming cheaper, and a greater Plug-inrepresenting vehicles only are 1 in still 50 new in theircar sales, infancy, rangepenetration of vehicles is less thanavailable 1 in 200on vehiclesthe market. All regions of GB have significantly increased the number of plug-in vehicles on the road since 2011 – with the representingand 1 in 250 only vehicles 1 in on 50 the newroad. carHowever, sales, currently on the road7. This suggests that Yorkshire and the Humber having 200 times more vehicles in 2018 (Figure 3.6). andBritain 1 in is on-track250 vehicles to achieve onplug-in the vehicle road. growth will need to continue along this Plug-in vehicles are most abundant in the southern regions of GB. This suggests However,targets, whichBritain require is on-track a 27% share to ofachieve the regionalseemingly factors exponential – e.g. trend income, to ensure availability of chargers, driving patterns – are plug-inprivate vehicle vehicle fleettargets, by 2030. which require a affectingthat the plug-in the expansion vehicles of account plug-in for vehicles. 27% of all personal vehicles by 20309. 27% share of the private vehicle fleet by Despite recent growth, plug-in vehicle penetration is less than 1 in 200 vehicles 7 2030. currently on the road . This suggests that growth will need to continue along this Electric vehicle sales have seeminglyRegionally, exponential the West Midlands, trend to theensure East, that the plug-in vehicles account for 27% of dramatically increased since South East and London are leading,9 with Electric vehicle sales have all personal vehicles by 2030 . 2011 in all GB regions. plug-in vehicle penetration above the 2017 dramatically increased since Regionally, the West Midlands, the East, South target of 0.4%. However, many regions, 2011 in all GB regions. East and London are leading, with plug-in vehicle penetrationsuch as Wales above and thethe North 2017 West, target are of 0.4%. However,at risk of beingmany left regions, behind such in the as plug-in Wales and the Plug-inPlug-in vehicles vehicles are are mostmost abundantabundant on on the Northvehicle West, transition, are at achieving risk of being less left than behind 0.2% in the roadsthe ofroads the of southern the southern half half of ofBritain. Britain. They plug-inof plug-in vehicle vehicle transiti penetration.on, achieving This regional less than are Theymore are than more three-times than three-times more more prevalent 0.2%disparity of could plug-in potentially vehicle be maskedpenetration. in This regional disparity could potentially be masked in in theprevalent West inMidlands the West asMidlands in Wales. as in the future, if the national target is achieved the future, if the national target is achieved Wales. This suggests other barriers are through the efforts of only a few key regions. This suggests other barriers are present through the efforts of only a few key regions.

present in the northern regions that is in the northern regions that is impeding impeding the growth of plug-in vehicles. the growth of plug-in vehicles.

Plug-in vehicle growth has had a 60-fold increased since 20117, resulting in their Energising Britain 47 increased share of newly sold vehicles, from 0% in 2008 up to 2% by 2018 (Figure 3.6). This growth is likely a direct result of EVs becoming cheaper, and a greater range of vehicles available on the market. All regions

of GB have significantly increased the number

of plug-in vehicles on the road since 2011 Figure 3.6: (left) Proportion of new car sales that are electric7,8; (right) Number of registered plug-in vehicles by region.7

– with the Yorkshire and the Humber having 48 Transport 200 times more vehicles in 2018 (Figure 3.6). Plug-in vehicles are most abundant in the southern regions of GB. This suggests regional factors – e.g. income, availability of chargers, driving patterns – are affecting the expansion of plug-in vehicles.

3.1.33.1.3 EV EV charging charging points

Figure 3.7: Barometer for electric charging points.10,11 Top: national progress; Above: regional progress; Top Right: map of the number of electric charging locations.

There are currently over 17,000 chargers in This is not particularly surprising for London Great Britain, of which 3,600 are rapid. By and the South East, as they currently 2030, there should be over 28,000 chargers. have a large share of the electric vehicles currently on the road. Scotland, on the other hand, is one of the lower ranking EV charger deployment regions in terms of number of EVs on the is well ahead of schedule to road. The high number of electric chargers meet the 2030 target, but could suggest a strong projected growth in the deployment is highly battery electric vehicles in the region. This clustered in cities. could in part be related to the environmental commitments set by the devolved power.

The national target was apportioned to While all regions have deployed more each region based on the current number chargers than required to achieve the of registered vehicles. Scotland and London indicative 2018 target, over 50% are have already deployed more chargers than located in London, Scotland and the would be required to achieve the 2030 South East. Scotland and London target. All other regions have surpassed have already deployed more chargers their indicative 2018 deployment target. This than required by the 2030 target. suggests that all regions are implementing one of the tools required to support the Electric charger deployment is on track electrification transition of the private vehicle. 50 Transport to achieve its 2030 target ahead of time, having already achieved the interim target for 2020 (6,250 chargers). There are currently more rapid chargers in the GB than the target suggests there should be by 2030 to support a growing EV industry (1,170 in 2030 versus 3,600 in August 2018). Further, in August 2018, 2/3 of the parking-based chargers required by 2030 were already installed in Britain. However, these EV chargers are not evenly distributed amongst the British regions, with over 50% located in London, Scotland and the South East.

3.1.43.1.4 Hydrogen Hydrogen refuelling refuelling stations stations

Figure 3.8: Barometer for hydrogen refuelling stations.10,12 Top: national progress; Above: regional progress; Top Right: map of regional current status.

Hydrogen refuelling station deployment is As with electric chargers, though to a more not occurring quickly enough, jeopardising extreme degree, the distribution of hydrogen the achievement of the 2030 target, needed stations is strongly clustered – currently, over to support a hydrogen transport network. 50% of refuelling stations are in London. A further eight stations are located in western Great Britain, and one on the Scottish 65 hydrogen refuelling East coast. Further, the national target for stations are required stations was apportioned to each region to support an initial based on the current number of registered hydrogen network in GB. vehicles. London and Wales are the only There are currently 19, regions that are on track to achieve the with over half located 2030 target. Conversely, the eastern side in London. of England (excluding London) does not have any refuelling stations, threatening their ability to achieve the 2030 target.

Apart from London, hydrogen refuelling The location of these stations limits the stations are predominantly located operation of hydrogen-fuelled vehicles, and on the western side of Britain and further limits the benefits (e.g. improved air tend to be relatively clustered. quality) of this energy transition to a few clustered areas. Due to their long distance

The government-industry UK H2 Mobility and high energy requirements, heavy goods Energising Britain 53 initiative set a target for the number of vehicles (HGVs) would benefit most from a hydrogen refuelling stations required to well-developed hydrogen network. However, support a national hydrogen vehicle fleet. the limited deployment and clustering of By 2030, 1,150 would be required, with stations are restricting its use in HGVs. intermediate targets of 65 filling stations for 2020 and 330 by 202512. Currently, there are only 19 hydrogen refuelling stations, jeopardising the feasibility of achieving the 2030 target, unless considerably more effort is put towards their deployment.

3.1.53.1.5 Electric Electric andand hydrogenhydrogen busbus penetrationpenetration

Figure 3.9: Barometer for battery electric and hydrogen buses.13,9 Top: national progress; Above: regional progress; Top Right: map of regional current status.

The transition to electric and hydrogen buses The share of battery electric and hydrogen in on track to achieve the 2030 target. Despite buses in each region is affected by the making up a low share of the bus fleet, commitments made by cities within each electric buses are replacing, in part, diesel region. The East Midlands has the greatest buses coming to the end of their lifetime. share of electric buses compared to any other region. Nottingham, in the East Midlands, has been an early adopter having Early battery and hydrogen just increased their fleet to 58 electric buses. electric bus fleet penetration Cities tend to make their commitments is on track even with overall to electric buses due to the air quality growth of the bus fleet. improvements they can provide. London has seen a 15-fold increase between 2013 and 2018 in the number of electric and hydrogen buses, which is linked to TfL’s air pollution Commitments to improving air quality by cities commitments14. The continued transition is resulting in an increased share of electric towards electrified public road transport will and hydrogen buses in the overall fleet. depend on cities, as currently electric buses have been limited to relatively short routes. By 2030, battery electric and hydrogen However, with the implementation of a buses should account for 3% of bus fleet, larger hydrogen network across the country, which, compared to the plug-in vehicle non-metropolitan areas could also benefit target, is relatively small. This is related to from an ultra-low emissions bus network. 56 Transport the longer asset lifetime of the current bus fleet compared to private vehicles, and therefore a complete change in the fleet requires more time. While electrification transition may be slow, the progress is encouraging. The absolute number of battery electric and hydrogen busesb is increasing at the same rate as its penetration rate of the entire fleet (Figure 3.10). This suggests that the increased proportion is due to replacing the existing (diesel) fleet with electric/ hydrogen buses, rather than from any decrease in the absolute number of buses.

13 Figure 3.10: (left) Electric and hydrogen buses (blue line) and penetration of bus fleet (red13 line) ; (right) Number Figure 3.10: (left) Electric and hydrogen buses (blue line) and penetration of bus13 fleet (red line) ; (right) Number of ultra-low emissionof ultra-low buses emission by region buses between by region 2013 andbetween 2018 2013(quarter and 1). 201813 (quarter 1).

The share of battery electric and hydrogen buses in each region is affected by the commitments made by cities within each region. The East Midlands has the greatest share of electric buses compared to any other region. Nottingham, in the East Midlands, has been an early adopter having just increased their fleet to 58 electric buses. Cities tend to make their commitments to electric buses due to the air b Datasets only report the number of ultra-low emission quality improvements they can provide. Londonvehicles (ULEVs), has which seen are a vehicles 15-fold that emit increase less than 75g CO /km. Therefore, in the case of buses, this refers between 2013 and 2018 in the number of electric2 and hydrogen buses, which is to plug-in electric or hydrogen buses. linked to TfL’s air pollution commitments14. The continued transition towards electrified public road transport will depend on cities, as currently electric buses 34 have been limited to relatively short routes. However, with the implementation of a larger hydrogen network across the country, non-metropolitan areas could also benefit from an ultra-low emissions bus network.

3.1.6 Ultra-low emissions heavy goods vehicles

58 Transport

Figure 3.10: (left) Electric and hydrogen buses (blue line) and penetration of bus fleet (red line) 13; (right) Number of ultra-low emission buses by region between 2013 and 2018 (quarter 1).13

The share of battery electric and hydrogen buses in each region is affected by the commitments made by cities within each region. The East Midlands has the greatest share of electric buses compared to any other region. Nottingham, in the East Midlands, has been an early adopter having just increased their fleet to 58 electric buses. Cities tend to make their commitments to electric buses due to the air quality improvements they can provide. London has seen a 15-fold increase between 2013 and 2018 in the number of electric and hydrogen buses, which is linked to TfL’s air pollution commitments14. The continued transition towards electrified public road transport will depend on cities, as currently electric buses have been limited to relatively short routes. However, with the implementation of a larger hydrogen network across the country, non-metropolitan areas could also benefit from an ultra-low emissions bus network.

3.1.63.1.6 Ultra-low Ultra-low emissionsemissions heavyheavy goods goods vehicles vehicles

58 Transport

FigureFigure 3.11: 3.11: Barometer Barometer for for ultra-low emission HGVs.13 13 emissionTop: nationalHGVs. progress; Above: regional progress; Top Right: map of regional current status. Top: national progress; Above: regional progress; Right: map of regional current status. Less than 0.1% of the heavy goods vehicle Regionally, the South East, North West and Less(HGV) than fleet 0.1% is considered of the ultra-low heavy emission. Scotland have the greatest proportion of goodsThis is vehicle not surprising (HGV) as the fleet transition is is likely ultra-low emission HGVs. These regions consideredto be based ultra-low around hydrogen emission. fuel, which is are equipped with or are near hydrogen Thislacking is not a developed surprising refuelling as network. the refuelling stations. Wales, on the other hand, transition is likely to be based has over 10% of British hydrogen refuelling around hydrogen fuel, which is stations, but have one of the lowest share lacking a developedUltra-low emissions refuelling of ultra-low emission HGVs in its fleet. This network. HGV deployment is is likely explained by the fact that these limited in Britain, with hydrogen refuelling stations are located at Ultra-lowonly four emissions regions having universities/research centre, and therefore are HGV moredeployment than 1 is in 1000 not likely to play a large role in ensuring an uninterrupted hydrogen network. Further, it limitedheavy in goodsBritain, vehicles on the road. is important to note that differences between with only four regions regions are very small and all regions are having more than 1 at risk of not achieving the 2030 target. in 1000 heavy goods vehicles on the road. Progress towards the electrification of HGVs is not on track to achieve the 2030 Progresstarget, where 5.5% towards of the HGVthe fleet must electrificationbe electrified. of HGVs is not on track to achieve the 2030 target,Currently, where less 5.5% than a oftenth the of a HGV per cent fleetof mustthe HGV be fleet electrified. is considered ultra-low emissionsc. This is not unsurprising, Currently, less than a tenth of a per cent of the HGV fleet is considered ultra-low as HGV technology currently limits its emissionsc. This is not unsurprising, as HGV technology currently limits its transition transition to using hydrogen, which, as

c Datasetsdiscussed do not previously, differentiate is betweenlacking thea developed different type s of ultra-low emission vehicles with regards to HGVs. However, based on the definition provided by the Department for Transport, only battery electric and hydrogen HGVsinfrastructure. would qualify However,under the classifica companiestion. Ultra-lowsuch emission vehicles (ULEVs) are vehicles that emit less than 75gCOas Tesla,2/km. Daimler, Volkswagen and Thor

Trucks, have unveiled plans to produce Energising Britain 59 electric HGV vehicles, with Tesla aiming to start production as soon as 2019. These future technological advancements could help Great Britain achieve its target, but this will be dependent on when these vehicles are commercially rolled-out.

c Datasets do not differentiate between the different types of ultra-low emission vehicles with regards to HGVs. However, based on the definition provided by the Department for Transport, only battery electric and hydrogen HGVs would qualify under the classification. Ultra-low emission vehicles (ULEVs) are vehicles that

emit less than 75gCO2/km.

35 3.1.73.1.7 Rail Rail emissions emissions

FigureFigure 3.12: 3.12: Barometer Barometer for for rail rail emission reductions. reductions.15,515,5 Top: nationalTop: national progress; progress; Above: Above: the share he share of electrified of electrified railways railways across Britain over the last three decades; 16; Top Right: Iain Staffell 7/11/18 10:18 16 17 acrossmap Britain of Britain’s over the railway last three lines, decades; with colours to signify existing or proposed electrified lines, and grey to signify diesel. Comment [5]: This image could be Right: map of Britain’s railway lines, with colours to signify improved further, needs larger text and the colours of existing vs. proposed vs. existing or proposed electrified lines, and grey to signify 17 non-electrified need to be better diesel.Rail emissions have decreased by only 1% To remain in line with the target, emissions differentiated. since 2010, suggesting the industry is falling will need to start falling due to greater Rail emissions have decreased by only well behind the progress needed to achieve overhead electrification and increased 1% since 2010, suggesting the industry the 2030 target. use of bi-modald, battery and hydrogen is falling well behind the progress trains, as well as the use of other low needed to achieve the 2030 target. carbon fuels. As the target includes Abandoned electrification both direct and indirect emissions, the Abandonedplans are electrificationjeopardising the sector could benefit from increasing the plansachievement are jeopardising of the the 2030 proportion of railways that are electrified achievementrail emissions of the 2030 target. rail to capture the falling carbon intensity of emissions target. the power sector. However, there has been very modest progress towards railway The proportion of electrified rail has only electrification in the last 30 years (Figure modestlyThe proportion increased of electrified since 1985, rail hasallowing only 3.12). The proportion of electrified rail in onlymodestly a small increasedsegment since of the 1985, rail allowing network a year is sensitive to the completion to benefitonly a small from segment a decarbonising of the rail network power to of electrification projects. The recently benefit from a decarbonising power sector. abandoned overhead electrification plans sector. on the Great Western Main Line, Midland

By 2030, the rail industry needs to reduce Main Line and Lake Line suggests that

its direct and indirect emissions by 25% as the proportion of electrified rail will not Energising Britain 61 5 compared to 2010 . Emissions reductions dramatically increase in the near future, will likely occur in an exponential fashion jeopardising the 2030 target18. But, the due to the inertia of the industry and the government does suggest that trains on relatively long time-frames required to these lines could be battery and hydrogen complete infrastructure improvements. powered. While the proportion of electrified It is, therefore more likely that emissions rail will increase with the completion of reductions will occur in large discrete steps, High Speed 2, this is not expected to be rather than constant yearly reductions. completed before the late 2020s, and However, since 2010, emissions in rail therefore its contribution towards achieving have only decreased by 1% suggesting the target could be limited, especially if that there is still considerably more work there are any completion delays. Further, required to achieve the 2030 target. part of the remaining regions to electrify are too remote, and therefore the business case for electrification is not strong.

d A bi-mode train is powered by and can switch between an electricity supply or an on-board diesel engine.

36 3.2 Implications of a transitioning transport sector

3.2.1 Total cost of car ownership In London, unlike other regions, private into every working day, the annual cost passenger vehicles vehicle use is not the main commuting of a petrol and diesel vehicle would mode, resulting in lower annual driving increase by up to £3,000. Therefore, due A regional analysis of the total distances and subsequently lower TCOs. to the additional £9,000 cost that would cost of ownership (TCO) of Further, London has implemented an be incurred over a 3-year period for fossil conventional (petrol and diesel), additional tax – the Congestion Charge – cars, the TCO of PHEVs becomes lower battery electric (BEV) and from which plug-in vehicles are exemptf. than fossil-fuelled vehicles in London. If plug-in hybrid electric (PHEV) As a result of this driving pattern and the similar schemes were introduced in other reveals which regions will incur additional charge on diesel (and petrol) regions, it could significantly improve a greater financial burden from vehicles, in London, the TCO of a BEV the economics of BEVs and PHEVs, electrification. This investigates is lower than diesel vehicles. Prior to the bringing them closer or even below cost the impacts of regional differences change of the Plug-In Grant Scheme, the parity with petrol and diesel vehicles. (e.g. driving habits, fuel costs) TCO of a BEV was also lower than a petrol on the TCO of privately-owned vehicle in London. Further, this research vehicles. Appendix 1 provides assumed that a vehicle would only enter an overview of the methodology, into the Congestion Charge zone eight while Appendix 2 provides times in the year. However, if travelled further analysis of the results.

The TCO gap is the difference in the lifetime cost of owning one vehicle over another. At a national level, the TCO gap is greatest between a petrol vehicle and a PHEV (~£6,200) and is the smallest between a diesel vehicle and a BEV (~£1,900)e. The regional variation in TCO is strongly related to the regional differences in kilometres driven, and, to a smaller extent, the regional variation in fuel cost prices (i.e. electricity, petrol and diesel). The annual distance travelled by each vehicle impacts its fuel requirements, depreciation rate and maintenance cost. Further, recent changes to the Plug-In Grant Scheme –BEVs, as of the beginning of November 2018, will receive £3,500 instead of £4,500 and PHEVs will no longer receive any subsidy, previously £2,500 – has increased the TCO gap between these electric cars and fossil fuelled ones. Prior to this change, the TCO gap between a petrol vehicle and PHEV was ~£3,700 and between a diesel and BEV was ~£900. Irrespective of vehicle type or changes in the Grant Scheme, the TCO gap is highest in Wales and Scotland, and lowest in London (Figure 3.13).

e Plug-in vehicles are likely to become even more cost-competitive against diesel vehicles, due to incoming legislation bans on diesel affecting depreciation rates. Figure 3.13: Regional TCO gaps between conventional and plug-in vehicles. f Based on data published by TfL, who maintain the Congestion Charge scheme, an average of eight trips per vehicle per year into the congestion charge zone was assumed.

Battery electric vehicles are already cheaper than petrol and diesel cars in London. This is related to fewer kilometres driven and the additional congestion charge.

While the TCO gaps may suggest BEVs, and to a lesser extent PHEVs, are approaching cost parity with conventional vehicles, there are additional concerns that could further hinder the deployment of these electrified vehicles. The initial cost, including the Plug- In Grant, of BEVs and PHEVs, used in this analysis, are up to twice the price of petrol and diesel cars. This significantly larger up- front cost can negatively impact the uptake of plug-in vehicles, even if TCO costs were relatively similar. This is especially true for lower gross income households, though the burden of a high initial cost could be slightly dampened if vehicles are financed.

In general, the availability of charging facilities correlates with the uptake of electric vehicles across GB. This is evident when looking at Wales, which has the fewest electric charging facilities and the lowest EV share in its fleet. Scotland, on the other hand, is an exception where the high share of British EV chargers are offset by the high TCO costs of plug-in vehicles. This suggests that in some cases costs issues outrank a high charger availability. As London is currently the only region where switching to BEVs produces a financial benefit against diesel vehicle ownership, it is best suited to continue pursuing the transition towards an electrified private car vehicle fleet. Additional measures (e.g. congestion charge) could be implemented in other regions to even out TCO barriers, giving regions the same opportunities to progress along the electrified private vehicle transition.

38 3.2.2 Availability of electric The average distance to an EV charger for vehicle charging points British regions ranges between 0.8km and Competition for EV 3.7km, suggesting that charging facilities London, Scotland and the North East chargers will become more should not be a barrier to EV uptake, given have a low ratio of number of EVs per acute if EV penetration targets current technology (Figure 3.14). However, available charging point, linked to having are achieved. This is likely when investigating in further detail where a higher proportion of EV chargers and/ to be especially true in cities these chargers are located, it is not very or a smaller (absolute) number of EVs where more vehicle owners surprising to find them clustered around (Figure 3.14). The East of England and the will not have private access cities – where population (and vehicle) West Midlands have much higher ratios, to charging infrastructure. densities are highest and where people have suggesting greater competition for charging. limited opportunities for private charging However, this competition would not be as (i.e. do not have private garages/driveways). acute if EV penetration had not exceeded This suggests that anxieties over charging the 2017 modelled penetration of 0.4% The average distance between a home and facilities may in part be dampened in cities of the fleet. This potentially suggests that the nearest charger will affect, at least in but will remain present (if not stronger) in in these regions the number of EVs is part, how a consumer perceives the ease rural areas, where distances to chargers growing rapidly but is not being matched of use of an EV. London has the lowest may be far greater. Rural areas, and non- by charging infrastructure. On the other average distance between a home and a metropolitan regions, are therefore at hand, if EV penetration in Wales had charger, which is not surprising given the risk of behind left behind in the transition achieved 0.4% in 2017, it would have high number of EV chargers and the high towards private-vehicle electrification. seen much greater competition for their density of homes (Figure 3.14). Wales, on EV chargers at 11 vehicles per charger. the other hand, has the largest average A particular example of this is seen in The regional variations in the number of distance between chargers and homes. Scotland, which has large areas without EVs per charger would become even more This could again partly explain, any charging points (particularly in the pronounced by 2030g, with competition along with the higher TCO of plug-in Highlands). Nonetheless, the average being as low as 125 cars per charger in vehicles, why uptake of EVs in Wales Scot is closer to a charging point than London to as high as of 590 cars per charger is lagging every other region. people in most English regions. This in the West Midlands. This competition is because chargers in Scotland are will greatly affect vehicles owners who heavily concentrated within Glasgow, do not have private at-home charging. Edinburgh, Dundee and Aberdeen, giving This competition would be amplified by good coverage for most, but some overnight charging, if owners utilised these people will be left more than 50 km away public points for such charging patterns, from any charging infrastructure. as vehicles will remain in these limited spots for longer periods, denying access The increase in EVs will have impacts on to other vehicles. Therefore, this projected network loads, as the consumption of competition appears to suggest that the one vehicle is equivalent to an additional 27,000 EV charger target may not be home19. There is potential for these vehicles sufficient to support the EV deployment. to charge overnight, when current demand is lowest. However, this will likely further change the demand profile. Further, owners will likely plug in their cars when they are parked, rather than returning to plug them in when demand is lowest. In this case, there is potential to delay or offset charging times, through smart charging to ease peak demand. Vehicle to grid (V2G) has been suggested as an extension to smart charging, which would enable electricity Figure 3.15: Average distance from households to the nearest EV charging point (both rapid or slow). stored in EVs to be fed back into the grid at times of peak demand. Regions with less EV penetration and charger deployment could miss out on any benefit available from smart charging and V2G. This could mean more investment in grid reinforcement in these regions, with the cost being passed onto the consumers.

Figure 3.14: Number of EVs per charging point by region.7,10 g This assumes that the 2030 charger target is met and that each region increases their charger volume by the same proportion.

39 3.2.3 Railway investment

In 2016-17, £15.5 billion was spent on maintaining and improving the British rail sector, with three-quarters of the funding from central government and the remainder from local government and private corporations20. There are, however, large regional disparities in where these funds are allocated. London received almost 50% of the total monetary input (£6.8 billion), while the North East received less than 2% (£290 million)20. When normalised by the total number of journeys taken in that same year, the North East, followed by Wales and the South West, invested the most per journey, whereas the East, South East and London all spent the least per passenger journey (Figure 3.16).

Figure 3.16: Railway investment in absolute terms and per passenger journey.20,22 Figure 3.16: Railway investment in absolute terms and per passenger journey.20,22 When comparing Figure 3.16 to the This suggests that despite the documented London spends more on railways than any other electrification map (Figure 3.12), railway large up-front cost, electrification can be GB region, but the North spending, electrification and spend per economically viable in the long-term, East spends the most per passenger3.3 References journey appear to be correlated. especially on routes with high passenger passenger train journey. Generally, regions – such as London, the frequency. There are also additional benefits 1 Eurostat (2018): SHARES (Renewables). South East and the North West – that have linked to greater investment in electrification, https://ec.europa.eu/eurostat/web/energy/data/shares the2 highest absolute spend on rail are also such as reduced journey times, quieter Department for Business, Energy and Industrial Strategy (2018): Local Authority CO2 21 theemissions regions with estimates the lowest 2005-2016 spend per (kt journey CO2) – Subsetjourneys dataset and. increased passenger use . (duehttps://www.gov.uk/government/collections/uk-local-authority-and-regional-carbon- to high frequency of journeys) and have These rail investments can therefore lead dioxide-emissions-national-statistics#2018 a large portion of the electric rail network. to modal shifts, which could result in even 3 Department for Business, Energy and Industrial Strategy (2018): Table 3: Estimated Theemissions reverse is of generally Greenhouse true Gasesfor regions by source with catefurthergory, typeGHG of savings, fuel and especially end-user ifcategory, lowUK absolute 1990-2016 rail investment. https://www.gov.uk/government/collections/final-uk-greenhouse-gas- – such as passengers are moving from private, emissions-national-statistics#2018 Wales,4 the North East and the South West. fossil-based transportation. Department for Business, Energy and Industrial Strategy (2018): “Local Authority CO2 emissions estimates 2005-2016 (kt CO2) - Full dataset. https://www.gov.uk/government/collections/uk-local-authority-and-regional-carbondioxide-emissions-national-statistics 5 Committee on Climate Change (2015): Sectoral scenarios for the fifth carbon budget. https://www.theccc.org.uk/publication/sectoral-scenarios-for-the-fifth-carbon-budgettechnical-report/

Energising Britain 71

40 3.3 References

1 Eurostat (2018): SHARES (Renewables). 12 UK H2 Mobility (2013): Phase 1 Results. https://assets.publishing. https://ec.europa.eu/eurostat/web/energy/data/shares service.gov.uk/government/uploads/system/uploads/ attachment_data/file/192440/13-799-uk-h2-mobility-phase-1- 2 Department for Business, Energy and Industrial Strategy (2018): results.pdf Local Authority CO2 emissions estimates 2005-2016 (kt CO2) – Subset dataset. https://www.gov.uk/government/collections/ 13 Department for Transport (2018) Table VEH0130: Ultra low uk-local-authority-and-regional-carbondioxide-emissions- emission vehicles (ULEVs) licensed at the end of quarter by national-statistics#2018 bodytype, including regional breakdown for the latest quarter, United Kingdom from 2010 Q1. https://www.gov.uk/government/ 3 Department for Business, Energy and Industrial Strategy (2018): collections/vehicles-statistics Table 3: Estimated emissions of Greenhouse Gases by source category, type of fuel and end-user category, UK 1990-2016. 14 Transport for London (2018): Air Quality. https://tfl.gov.uk/ https://www.gov.uk/government/collections/final-uk- corporate/about-tfl/airquality greenhouse-gasemissions-national-statistics#2018 15 Office of Rail and Road (2017): Rail infrastructure, assets 4 Department for Business, Energy and Industrial Strategy (2018): and environmental: 2016-17 Annual Statistics Release.

“Local Authority CO2 emissions estimates 2005-2016 (kt CO2) - http://orr.gov.uk/__data/assets/pdf_file/0008/25838/ Full dataset. https://www.gov.uk/government/collections/ railinfrastructure-assets-environmental-2016-17.pdf uk-local-authority-and-regional-carbondioxide-emissions- 16 Office of Rail and Road (2018): Infrastructure on the railways national-statistics - Table 2.52. http://dataportal.orr.gov.uk/displayreport/report/ 5 Committee on Climate Change (2015): Sectoral scenarios for the html/c35e0c28-324f-4168-81b9-be197963f251 fifth carbon budget.https://www.theccc.org.uk/publication/ 17 Network Rail (2015): A Guide to Overhead Electrification. sectoral-scenarios-for-the-fifth-carbon-budgettechnical-report/ http://www.bathnes.gov.uk/sites/default/files/sitedocuments/ 6 Committee on Climate Change (2018): Reducing UK emissions Planning-and-Building-Control/Planning/nr_a_guide_to_ – 2018 Progress Report to Parliament. https://www.theccc.org.uk/ overhead_electrification.pdf publication/reducing-uk-emissions-2018-progress-report-to- 18 Department for Transport and the Rt Hon Chris Grayling MP parliament/ (2017): Rail update: bi-modetrain technology. https://www.gov.uk/ 7 Department for Transport (2018): Table VEH0131: Plug-in cars, government/speeches/rail-update-bi-mode-traintechnology LGVs and quadricycles licensed at the end of quarter by upper 19 EA Technologies (2018): Consultation on the Interim Solution for and lower tier local authority, United Kingdom from 2011 Q4. Domestic Managed Electric Vehicle Charging: protecting local https://www.gov.uk/government/collections/vehicles-statistics electricity network assets in the absence of market-led solutions. 8 Department for Transport (2018) Table VEH0101: Licensed vehicles https://www.eatechnology.com/wpcontent/uploads/2018/08/ at the end of the quarter by body type, Great Britain from 1994 Q1; Smart-EV-Managed-EV-Charging-Interim-Solution-Consultation- also United Kingdom from 2014 Q3. https://www.gov.uk/ Summary-Report-v1.0.pdf government/collections/vehicles-statistics 20 HM Treasury (2017): Country and regional analysis November 9 National Grid (2018) Future Energy Scenarios 2018. 2017. https://www.gov.uk/government/statistics/country-and- http://fes.nationalgrid.com/fesdocument/ regional-analysis-2017

10 Zap Map (2018) “Charging Point Statistics 2018”. 21 Network Rail (2018): Infrastructure insights: electrification. Available at: https://www.zapmap.com/statistics/ https://www.networkrail.co.uk/infrastructure-insights- electrification/ 11 Committee on Climate Change (2018): Plugging the Gap: An Assessment of Future Demand for Britain’s Electric Vehicle Public 22 Office of Road and Rail (2018): Passenger journeys by Region Charging Network. https://www.theccc.org.uk/wp-content/ – Table 15.14. http://orr.gov.uk/statistics/published-stats/ uploads/2018/01/Plugging-the-gap-Assessmentof-future- statistical-releases demand-for-Britains-EV-public-charging-network.pdf

41 Section 4: Energy in buildings

Domestic buildings are a high-carbon sector due to heating. 83% of household energy is used for space and water heating. For economic and environmental reasons this is clearly the area to focus upon.

Domestic energy efficiency is lagging a very rapid scale up. This will affect the Extreme electrification in the future could behind targets and non-domestic cost of energy for each region differently, benefit energy spend in Scotland and the energy efficiency targets do not exist. depending on the housing composition. South-West, while increasing costs for Scotland benefits from the largest share of midland and northern regions of England. high energy efficiency houses whilst Wales Electric heating is generally more expensive has the poorest performing housing stock. than on-grid gas and oil at current prices. There are already high levels of electrification This has a large effect on energy bills, Changing heating technology is capital in non-domestic buildings. The South especially with electric heating, which can intensive and is much more achievable in of England is the most electrified part have significantly higher costs than oil or non-rental housing unless the right policy of Britain in this sub-sector. gas. Low energy efficiency is also linked to conditions are in place, putting more stress fuel poverty. However, this correlation is hard on low-income households that rent. London and the South spend less on energy to see with the averaged out regional data. relative to Gross Value Added, making Southern England and Scotland spend companies in these regions less susceptible Fuel poverty has been fairly even across the most on domestic energy. However, to changes in the energy system. Britain, but it is generally more prevalent northern England and Scotland spend more in northern regions than southern ones, of their income on energy than in the south. matching the trends in household income. The difference in average spend by local authority area varies by approximately Few low-carbon heating systems (e.g. heat £750 per year. pumps) have been installed so far. Large deployment targets to 2030 will require

4 Section 4: Energy in buildings

FigureFigure 4.1:4.1: Progress Progress towards towards transforming transforming Britain’s Britain’s buildings, highlightingbuildings, thehighlighting areas that are the under- areas and that overperforming are under- and over- performingrelative to near-term relative targets to near-term for decarbonisation. targets for Each decarbonisati area is reviewedon. laterEach in areathis section. is reviewed later in this section.

Domestic buildings are a high-carbon will require a very rapid scale up. This sector due to heating. 83% of will affect the cost of energy for each household energy is used for space region differently, depending on the and water heating. For economic and housing composition. environmental reasons this is clearly Electric heating is generally more the area to focus upon. expensive than on-grid gas and oil at 42 Domestic energy efficiency is lagging current prices. Changing heating behind targets and non-domestic technology is capital intensive and is energy efficiency targets do not exist. much more achievable in non-rental Scotland benefits from the largest housing unless the right policy share of high energy efficiency houses conditions are in place, putting more whilst Wales has the poorest stress on low-income households that performing housing stock. This has a rent. large effect on energy bills, especially Southern England and Scotland spend with electric heating, which can have the most on domestic energy. significantly higher costs than oil or However, northern England and gas. Low energy efficiency is also Scotland spend more of their income linked to fuel poverty. However, this on energy than in the south. The correlation is hard to see with the difference in average spend by local averaged out regional data. authority area varies by approximately Fuel poverty has been fairly even £750 per year. across Britain, but it is generally more Extreme electrification in the future prevalent in northern regions than could benefit energy spend in Scotland southern ones, matching the trends in and the South-West, while increasing household income. costs for midland and northern regions Few low-carbon heating systems (e.g. of England. heat pumps) have been installed so far. Large deployment targets to 2030

74 Buildings

4.1 Overall buildings current status and future targets

The energy transition in buildings is The direct GHG emission reductions The electrification through heat pumps primarily driven by the cost of in all buildings are on track to achieve is forecasted to become common place energy and climate policy. The the 2030 target. For direct emissions, throughout British homes, with a predicted sector has seen many initiatives (e.g. reductions are either achieved by reducing 1 in 12 households utilising this technology Green Deal) over the past decade to consumption of energy (outside of in 2030. At the same time, this will be facilitate the reduction of demand, electricity) or fuel switching to electricity. supported by an energy efficient housing with the aim that these will bring The factors affecting these methods are stock, with approximately 3 out of 4 lower energy bills and lower GHG investigated in the following sections, houses having an Energy Performance emissions. There are two main where domestic and non-domestic Certificate above a band C. This sub-sectors within buildings: buildings are considered separately. improvement will help to lower consumption, domestic and non-domestic, the reducing energy bills or soften any possible latter comprising of commercial and Towards a 2030 future, a combination increases in the cost of heating through public buildings but not industrial or of a change to low-carbon heating alternative technologies and fuels. agricultural buildings. Electrification technologies and increasing energy in buildings currently makes up efficiency will drive a reduction in direct GHG The lack of available data and targets leave about 35% of total consumption emissions from this sector. Electrification the future energy transition in buildings (see Figure 1.3). There is a large of heating is one method to achieve unclear, with even the current state of difference between the buildings decarbonisation in buildings – shifting the energy in buildings being relatively difficult to subsectors. Commercial buildings emissions burden from the buildings sector determine, when compared to other sectors. utilise electricity for approximately to the power sector. Although a viable This is particularly evident in nondomestic 50% of their energy use, whereas option, the economics and practicalities of buildings, where little information on domestic buildings only use just electrification for heating versus a range of the sub-sector’s progress exists. above 20%. Public buildings are other low-carbon options, such as hydrogen Elevated levels of heating electrification only slightly more electrified at just and biomass is still unclear. The exact in non-domestic buildings is likely to be a below 30%. individual contributions of each of these good option for further decarbonisation, technologies to a low-carbon buildings although increases in commercial sector will become clearer through the energy spend may affect businesses 2020s, where policies will be implemented in some region more than others. to reach climate targets and rapidly falling costs of renewable generation technologies.

43 4.2 Current status and future targets for domestic buildings 4.2 Current status and future targets for domestic buildings 4.2.14.2.1 Domestic Domestic GHGGHG emissionsemissions

Figure 4.2: Barometer for direct GHG emissions from domestic buildings. 1,2,3,a FigureAbove: 4.2: national Barometer progress for direct GHG emissions from domestic buildings. Above: national progress1,2,3,a; Below right: The split of energy consumption in an average householdThe reduction across different of direct energy servicesGHG 4emissions. These options have been supported by but electric replacements are usually less from domestic buildings is on track. Direct government policies aimed at increasing straightforward and can be more expensive. The reduction of direct GHG emissions emissions reductions have mainly been energy efficiency (e.g. Energy Company Most of the economic and environmental from domestic buildings is on track. Direct achieved through reducing consumption Obligationb) and low-carbon energy savings in domestic buildings can be emissions reductions have mainly been by increasing energy efficiency and by technologies in homes (e.g. through achieved by increasing their thermal energy achieved through reducing consumption switching heating to cleaner fuels or to the Renewable Heat Incentivec). efficiency and/or by switching heating by increasing energy efficiency and by electricity (where it is then accounted for technologies and fuels. There is potential of switching heating to cleaner fuels or to in indirect emissions – the power sector). Heating (space and water) dominates decreasing direct emissions further through electricity (where it is then accounted for domestic energy usage, accounting for over electrification of heating (or other low- in indirect emissions – the power sector). 80% of total domestic building energy carbon options). However, the additional Over 80% of energy demand. Lighting and appliances are (indirect) emissions could result in an

usedOver in 80% homes of energy is for used heating in 100% electrified, whereas cooking still overall net-increase if power sector does – suggestinghomes is largefor heating potential – for uses fossil fuels in many homes but can not decarbonise fast enough. The following continuedsuggesting largedecarbonisation.. potential for be electrified with relative ease4. Heating sections now focus on these efficiency and continued decarbonisation. (water and space) is predominately achieved heating technologies measures, as well through the combustion of fossil fuels as their socio-economic implications.

These options have been supported by government policies aimed at increasing energy efficiency (e.g. Energy Company Obligationb) and low-carbon energy technologies in homes (e.g. through the Renewable Heat Incentivec).

Heating (space and water) dominates domestic energy usage, accounting for over 80% of total domestic building energy demand. Lighting and appliances are 100%

a 2017 target is calculated by fitting a declining exponential function to the GHG emission reductions required for CCC target b The Energy Company Obligation (ECO) is a government energy efficiency scheme in Great Britain to help reduce carbon emissions and tackle fuel poverty. You can find out more here about how the scheme affects consumers, suppliers, installers and industry. More info at https://www.ofgem.gov.uk/environmental-programmes/eco c More information is available on the RHI at https://www.ofgem.gov.uk/environmental-programmes/domestic-rhi

78 Buildings

a 2017 target is calculated by fitting a declining exponential function to the GHG emission reductions required for CCC target. b The Energy Company Obligation (ECO) is a government energy efficiency scheme in Great Britain to help reduce carbon emissions and tackle fuel poverty. You can find out more here about how the scheme affects consumers, suppliers, installers and industry. More info at https:// www.ofgem.gov.uk/environmental-programmes/eco c More information is available on the RHI at https://www. ofgem.gov.uk/environmental-programmes/domestic-rhi.

4.2.24.2.2 Energy Energy efficiency efficiency

Figure 4.3: Barometer for energy efficiency by Energy Performance Certificate (EPC) ratings. Top: national progress,5,d,e,f; Above: regional progress; Top Right: map of current status.

The Energy Performance Certificate ratings Generally speaking, the regions with of buildings is currently behind where the most EPC ratings of F and G have modelling predicts it needs to be. Although, the lowest proportion of EPC ratings of it is within 90% of the 2018 target. C and above. Scotland has the most households with high EPC ratings and Wales and Yorkshire have the least. Homes in Scotland and The level of low EPC ratings has a South East England correlation with population density, with have the highest energy the more rural areas having a higher efficiency, while Wales the proportion than the urbanised areas. lowest efficiency homes. As buildings transition to cleaner heating technologies, energy efficiency will be important in keeping household energy bills A high proportion of the emission down. Electric or low carbon heating sources reductions required to reach the CCC can be more expensive than current heating 2030 GHG target is apportioned to (see section 0), so increases in efficiency energy efficiency measures. Total are important to offset these costs. The buildings GHG reductions by 2030 current lowest efficiency homes are found must be 26% for domestic and 21% for in areas with lower incomes and, therefore, non-domestic users. This emphasises would be more sensitive to energy cost the importance of energy efficiency increases – highlighting the importance for measures to achieve the overall targets. action to mitigate this effect in the future. 80 Buildings

The range in the average regional proportions only varies by approximately 10%. Yorkshire, the East Midlands and the Southwest have lower energy efficient homes than the South of England and Scotland. Scotland has the highest energy efficiency Figure 4.4: Regional analysis of energy efficiency ratings. homes and has benefitted from strong government agenda to support on the issue, initially through advice and education6,g. Other reasons for the regional differences are unclear but may include the age of the properties; newer houses have a better performance on average than d England and Wales EPC rating statistics + Scotland e EPC assigns a number (1-100) and letter rating (A-G) for older ones, with more new homes built in all properties depending on the efficiency of the building the southern, more efficient regions7. and the heating. f Known issues the available EPC data complicate Also, the affordability of energy efficiency measuring and creating progress, e.g. the statistics do not improvement measures can be a barrier, include every household and they are only recorded as ‘lodgements’, which prevents distinguish whether as the areas with lower efficiency typically improvements have been made. have lower household income. g The Scottish Government has designated energy efficiency as a National Infrastructure Priority, the cornerstone of which will be Scotland’s Energy Efficiency Programme (SEEP) – a 15 to 20 year programme. More info at https://www.gov.scot/Topics/Business-Industry/ Energy/Action/lowcarbon/LCITP/SEEP

4.2.34.2.3 Fuel Fuel Poverty Poverty

Figure 4.5: Barometer for fuel poverty. Above: national progress 8,9,10,h; Top Right: map of current status.

Poor energy efficiency in homes is often Other factors linked to fuel poverty are linked to fuel poverty, as household bills can usually income and the ownership status of become too high to maintain a level of the property – whether it is let to a tenant comfort. 11% of households in Britain are or owned by the occupant. The restrictions fuel-poor. There is small (approximately 5% of upgrading a let property means that the at the most) variation in the proportions of tenant may not be able to implement any fuel poor homes in each region. Although, improvements; landlords do not gain enough it is important to note, even these small value themselves to implement the measures percentage changes means thousands or and vice versa for the tenants. 38% of homes even tens-of-thousands of homes. are rented, meaning large proportions of the population are subject to these restrictions11.

The Midlands, northern Scotland, although having higher energy England and Scotland had efficiency, has a mid-range value for the worst fuel poverty proportion of fuel poor homes when rates in GB between compared to the rest of the country in the 2012 and 2016. LIHC method. This could be caused by the low average income per household in this region as well as climatic factors. There are generally higher fuel poverty rates in the For fuel poverty an interim target was not northern and midland regions of England and included, as the eradication of fuel poor also Scotland, supporting the income per homes as soon as possible should be the household and climatic variation reasoning. objective. The political nature of this metric The averaging of household income and means that there are no milestones available fuel poverty rates across a region like the for 2018. Therefore, the status of fuel poverty South West could be masking information in Britain was deemed to be not on-track. about the spread and difference in wealth. There are large areas of relative poverty The Devolved Powers calculate fuel in the South West and this could also be

poverty through different methodologies. driving the fuel poverty rate in this region. 84 Buildings In Figure 4.5, the results are shown using the low-income high-cost methodology Similarly, the highest proportion of fuel (LIHC), which is used by England, but poor homes seen in the West Midlands applied to Scotland and Wales. However, could also be affected by the same using one methodology to calculate reasoning of that in the South West. The fuel poverty that is consistent and Midlands and the northern regions of England comparable between all the Devolved have some of the lowest shares of homes Powers would be useful for effective with EPC ratings C and above, suggesting policies and measurement of progress. that this negatively affects the share of fuel poor homes in this region negatively. Using the national-specific methodologies, However, the West Midlands, although having Scotland has a 34% rate of fuel poverty, the highest fuel poverty rates, also has one and Wales 23% – significantly higher of the lowest proportions of homes with proportions than those identified by EPC rates F and G (the lowest ratings). This the LIHC method. This is important as confirms that although poor energy efficiency it dictates how many households get is linked to fuel poverty, there are other additional funding, but does not give a factors in these regional averages that have a consistent comparison across Britain. significant effect on the levels of fuel poverty.

h In GB, 11.3% of homes are fuel poor. For this barometer, it is assumed that the start point is 0% non-fuel poor and the target is 100% non-fuel poor homes, as it is a government objective to have no fuel poor homes as soon as possible. For this reason, there is also no interim target value.

4.2.44.2.4 Electrification Electrification of of heatingheating

FigureFigure 4.6: 4.6: Barometer Barometer for for electrification electrification of heating. Top: Top:national national progress progress12,i,j; Above:12,i,j; Above: regional regional progress progress12,k; 12,k; Top Right: map of current status. Right: map of current status.

TheThe electrification electrification of of heating heating isis oneone option option to (ASHP) and ground-source (GSHP), where to potentiallypotentially reduce reduce the the climate climate impact impact of of GSHPs have higher efficiencies but require energyenergy use use in in homes. homes. HeatingHeating is iscurrently currently larger amounts of land and are more 8% 8%electrified electrified and and on-track on-track toto reach reach 2030 2030 costly to install. As with all electrification target.target. technologies, emissions depend on the carbon intensity of the power system and Electric heating penetration is would be accounted for in the power sector, highestElectric in Scotland heating and penetration the South reducing buildings’ direct emissions. Westis highestwhere there in Scotland are high proportionsand the South of off-gas West gridwhere There is a split regionally in share of electric heat with Scotland and the South of there arehouseholds. high proportions of off-gas grid households. England being above the national average of 8%. The remainder of Britain: the However, whether electrification of Midlands, North of England and Wales heating will reduce household energy bills are below it. There is a greater variation, depends on many factors, including the However, whether electrification of heating ranging from 0-25% of homes using electric

i Electricwill reduce heating householdincludes all electric energy heating bills dependstechnologies, fromheat, when analysed at a local authority storageon many resistance factors, heaters including to heat pumps. the efficiency The barometer startslevel. The extremities of Britain are the at 0% as no start year due to lack of data. Current electrical share is takenof the from heating 2011 data. technology; the price of most electrified with the Highlands and j Theelectricity; target for electrification and the efficiency of heating ofis theused home. from the Islands of Scotland seeing up to 25% modelling of the FES 2DS and is 15% by 2030. k Scotland data obtained from: Non-gas map https://www.nongasmap.org.uk/electric heating; the most westerly tip of the In GB, over 75% of households are South-West also having high proportions.

Energisingconnected Britain to the gas grid12. The use This is mainly due to the lack of gasgrid 87

of efficient boilers in homes connected connection in these areas (see Appendix 3). to the gas grid has helped see emissions reductions13. However, further As the energy system in Britain transforms, decarbonisation with gas combustion the areas with high penetrations of electric technology is highly limited, raising heat are susceptible to any changes in questions on what technology will proliferate electricity price – especially as the majority in a low carbon energy transition. The of current electrification of heating is future of heating is still under debate; not through the high efficiency options, the main options touted are electric such as heat pumps. Price rises will have heating, biomass and hydrogen, with a greater impact on those households varying degrees of hybridisation and which use the most electricity. co-existence14. Electric heating (e.g storage heaters) is not a new technology. However, there are questions over the efficiency and affordability of these older technologies given the current electricity price (higher when compared to gas and oil) and the efficiency of the current housing stock. Newer technologies are considered i Electric heating includes all electric heating technologies, from storage resistance heaters to heat pumps. The viable, notably heat pumps, claiming high barometer starts at 0% as no start year due to lack of data. efficiencies, potential heating bill decreases Current electrical share is taken from 2011 data. j The target for electrification of heating is used from the and fewer carbon emissions. There are modelling of the FES 2DS and is 15% by 2030. two types of heat pumps: airsource k Scotland data obtained from: Non-gas map https://www.nongasmap.org.uk/

4.2.54.2.5 Heat Heat pump pump deployment deployment

FigureFigure 4.7: 4.7: Barometer Barometer for for heat heat pump pump deployment.deployment. Top: Top:national national progress progress15,l; Above:15,l; Above: regional regional progress; progress; Top Right: map of current deployment of all low-carbon heating Right:technologies map of current (including deployment biomass of alland low-carbon solar thermal) heating16,m technologies (including biomass and solar thermal)16,m. The CCC model that 2.2 million heat pumps Aside from heat pumps, there are other The CCC model that 2.2 million heat pumps should be deployed by 2030, rising to low-carbon technologies: biomass boilers should be deployed by 2030, rising to 5.8 million by 2035. This assumes a and solar thermal (only for water heatingo. 5.8 million by 2035. This assumes a cost- cost-optimisedn deployment rate of over Scotland has high biomass deployment, optimisedn deployment rate of over 400,000 400,000 heat pumps per year in 2030, and as well as ASHP, possibly related to the heat pumps per year in 2030, and 900,000 900,000 per year in 2035. For context, large share of off-gas grid homes in the per year in 2035. For context, Britain installed Britain installed approximately 6,500 heat northern part of the region. Further, the 17 approximatelypumps last year 6,50017. heat pumps last year . South West also has high deployment of low-carbon heating technologies (Figure Heat pump deployment is not on-track. 4.7). In contrast, there are lower levels of Scotland and the Currently,Heat 1pump in 650 deployment homes has a heat deployment in the Midlands and northern South West have the most pump,is this not must on-track. rise to Currently, 1 in 12 by2030. parts of England. These areas have a high low-carbon heating 1 in 650 homes has a penetration of gas grid connections and deployments. However, low- Scotland andheat the pump, South this West must are ahead ofon average lower household income. The carbon heating penetration target deploymentrise to 1 in of 12 heat by pumps,2030. whilst alllatter may limit the ability to afford the high is below 1% in every other regions are behind. This is likelyupfront capital costs of low-carbon heating. region of Britain. because the installation of heat pumps is most

London has significantly lower deployment l In 2017, heat pumps deployment totalled 40,989 units (31,882Scotland ASHP and and the9,107 South GSHP). West16 are ahead of low carbon technologies, even though mForof this target analysis, deployment it was assumed of heat that pumps, there was only one low-carbonthe proportion heating technologyof houses installed off the pergas-grid property. is The overall percentages of low-carbon n Unitwhilst cost alldecreases other regionswith deployment, are behind. thus Thisdeployment numberssimilar will toincrease the rest over of time the achievecountry. cost-optimal This may heating are very low and even lower for just deployment. is likely because the installation of heat be down to the number of homes owned heat pumps. This shows, when compared with the electrification share in Figure Energisingpumps isBritain most attractive (practically compared to rented. Heat pumps and 89 and economically) in areas with high especially biomass boilers with fuel storage 4.6, a very small proportion are these off gas-grid houses. London is only at are large, and in urban settings space efficient electrical heating technologies 5% towards its 2018 interim target. comes at a premium or is not available – and will instead be utilising less efficient for example in blocks of flats. Therefore, technologies such as storage heaters. This Heat pumps deployed in 2017 totalled installation of these low-carbon technologies will have a negative effect on the cost of 40,989 units (31,882 as air-source heat may not be practical. There are further air energy for those areas with high (inefficient) pumps (ASHP) and 9,107 ground-sourced quality concerns about biomass boilers electrification (see section 4.2.4). heat pumps (GSHP))16. According to CCC within urbanised areas, such as central modelling, to achieve climate targets, there London. These urbanised areas could should be should behave been 65,000 heat benefit from support of other heating installed by 201715, therefore suggesting technologies not discussed here, current deployment is not on target. The such as district heating systems. current installation rate of approximately 6,500 per year is much lower than the modelled 28,000 per year in 2017. Heat pump l In 2017, heat pumps deployment totalled 40,989 units 16 installation is expected to rampup during the (31,882 ASHP and 9,107 GSHP). m For this analysis, it was assumed that there was only one 2020s and any delay could be compounded, low-carbon heating technology installed per property. n making targets difficult to reach. Unit cost decreases with deployment, thus deployment numbers will increase over time achieve cost-optimal deployment. o Low-carbon heating options included in OFGEM’s Renewable Heat Incentive classification: Biomass boilers, solar thermal and air-source/ground-source heat pumps. Biomass is used as a comparison in the future cost section. However, solar thermal is not used due to it only realistically being available to supplement water heating requirements, as well as a lack of available cost data.

48 4.3 Implications for household consumers

This section extracts some of the socio-economic factors of the current energy system for buildings and suggests a view of what a future may look like with further transformation.

4.3.1 Household energy costs

The current energy system outlined in the previous section results in the costs to domestic consumers shown in Figure 4.8. Household spend was calculated by using electricity and gas retail prices per region; fixed yearly electricity and gas cost per region; electricity and gas consumption by local authority and number of houses per local authority.

The regional map shows that household costs, on average, only vary by ~£180 across GB. Scotland and the South-East have the highest prices. However, at local authority level, there are variations of over £1000 in household energy spending. The energy spend in central London is very low (~£800) whereas on the outskirts into the South East the costs can be almost twice as high. This is likely related to the types of housing in each are, with central 18,19,20,21,p FigureFigure 4.8: 4.8: Average Average household household spend spend on energy on energy by region by region and local and authority. local authority.18,19,20,21,p London featuring smaller flats and terraced housing compared to larger detached The regional map shows that household costs, on average, only vary by ~£180 The Highlands and the particularly the properties of the South East. Low costs across GB. Scotland and the South-East have the highest prices. However, at local West coast of Scotland are high energy are also seen in mid-Wales and along authority level, there are variations of over £1000 in household energy spending. spendThe energyregions, whichspend correlates in central with London a is very low (~£800) whereas on the outskirts the East coast of England, particularly in highinto level the of South off-gas East grid homesthe costs using can be almost twice as high. This is likely related to Yorkshire and the Humber and the North electricthe types and lower of housing average intemperatures. each are, with central London featuring smaller flats and East regions. Wales has a high proportion terraced housing compared to larger detached properties of the South East. Low of off-gas grid homes but does not have Thecosts share are of alsoincome seen spent in onmid-Wales energy and along the East coast of England, particularly a high penetration of electric heatq. The increasesin Yorkshire outside and of London, the Humber the South and the North East regions. Wales has a high northern regions in England have high Eastproportion and East ofregions off-gas (Figure grid 4.8). homes The but does not have a high penetration of electric share of on-gas grid properties and higher income regions spend a smaller therefore benefit from low cost heat. proportion of their income on energy as the difference in energy spend between regions

p is small The average but the energy difference spend by in local household authority was divided by the average disposable household income in the local Southern England and authority. Disposable income, in this case, is defined as the remaining income after taxes and social payments; it is not the amount of income left after bills, rent and mortgage payments as it can sometimes be used. Scotland spend the most income is much larger. Generally, the energy spend as a share of income is higher in on domestic energy. 92 Buildings The difference in average Scotland than it is for England and Wales. local authority spend varies by around £1000.

p The average energy spend by local authority was divided by the average disposable household income in the local authority. Disposable income, in this case, is defined as the remaining income after taxes and social payments; it is not the amount of income left after bills, rent and mortgage payments as it can sometimes be used. q The cost of oil and LPG to households is not included in these calculations. On average, electric heating is more, and gas heating less expensive than oil and LPG. This should have only slight effects on the accuracy of the average household spend.

49 4.3.2 Changes in household energy costs

To see what the implications of further This gives an indicative view of how energy strong gas-grid connection, providing a energy transformations in buildings could spend will change through technology cheap heating option; the switch to ASHP look like, a future with high low-carbon changes. Scotland and South West look for these regions makes it more expensive. heating uptake was modelledr. It was to benefit from the assumed switching, In Scotland and the South West, there are assumed that all ‘standard’ on-gas grid with regions in the north of England being currently a lot of off-gas grid homes utilising homes use gas boilers and all ‘standard’ worse off. This is mainly due to the current oil boilers. The switch to ASHP in these off-gas grid homes, that are not electric level of spend on energy, with northern regions results in cheaper energy bills, when or biomass already, use oil boilers. There and midland regions of England having considering carbon pricing up to 2030. is also a carbon price incorporated in the future heating costs. The results show that low-carbon options can be cheaper for off-gas grid homes compared to those on gas-grid (Figure 4.9).

A change in average energy spend per home by region to 2030 is shown in Figure 4.10 for each of the selected t new low-carbon technologies . Further explanation of the calculation and Figure 4.9: The levelised cost of alternative heating systems in 2030 and 2050 relative to gas boilers (left) and oil 22,s assumptions is detailed in Appendix 3. boilers (right). A change in average energy spend per home by region to 2030 is shown in Figure t In general, a full-switch to a low-carbon Figure4.10 4.9:for Theeach levelised of the cost selectedof alternative new heating low-carbon systems in 2030 technologies and 2050 relative. Further to gas boilers explanation (left) and oil of Figure 4.9: The22, leveliseds cost of alternative heating systems in 2030 and 2050 relative to gas boilers (left) and oil boilers (right).22,s technology could significantly increase boilersthe calculation (right). and assumptions is detailed in Appendix 3.

energy spend, even with the carbon pricing A change in average energy spend per home by region to 2030 is shown in Figure included in these cost estimates (Figure 4.10 for each of the selected new low-carbon technologiest. Further explanation of 4.10). This increase ranges from 20% for the calculation and assumptions is detailed in Appendix 3. ASHP and biomass technologies to over 70% (and potentially) 100% for GSHP and conventional electric technologies. Overall, ASHP is the cheapest low- carbon option for all regions under these parameters. Biomass is more expensive but competitiveness and costs may vary regionally. These costs assume that there are no efficiency upgrades, keeping the heat demand constant. However, the additional Figure 4.10:4.10: Average Average change change in in household household energy energy spend spend fromfrom installinginstalling new new low-carbon low-carbon technologies. technologies. 0% 0% implies implies no change cost of running electric or other alternative nowhen change moving when from moving a gas fromboiler. a ASHPgas boiler. = Air ASHPSource = Heat Air SourcePump. HeatGSHP Pump. = Ground GSHP Source = Ground Heat SourcePump. Heat Pump. heating technologies would benefit from

energy efficiency upgrades to homes. s Figure The average 4.10: Average levelised change costs fromin household 2018 to energy2030 for spend each fr tecomhnology installing were new divided low-carbon by the technologies. average levelised 0% implies cost for gas boiler (on-gas grid homes) and oil boilers (off-gas grid homes). no change when moving from a gas boiler. ASHP = Air Source Heat Pump. GSHP = Ground Source Heat Pump. t All on-gas grid homes and all off-gas grid homes that were not already electric or biomass switching to a low- carbon technology. The results from these calculations are a theoretical exercise and show the extremes of costs if one low-carbon technology is selected. This method does not use systems modelling or any optimisation.

s The average levelised costs from 2018 to 2030 for each technology were divided by the average levelised cost for Large-scale electrification gas94 boiler (on-gas grid homes) and oil boilers (off-gas grid homes). Buildings of gas and oil heating using t All on-gas grid homes and all off-gas grid homes that were not already electric or biomass switching to a low- carbon technology. The results from these calculations are a theoretical exercise and show the extremes of costs if ASHP could produce regionally one low-carbon technology is selected. This method does not use systems modelling or any optimisation.

winners and losers, with 94 Buildings Scotland and the South West reducing their energy spend by switching.

With a focus on ASHP as the cheapest option, Figure 4.11 visualises how the energy spend will change by region as the system is transformed through removing natural gas and oil heating completely, applying carbon pricing and electrifying through ASHP. Figure 4.10: Average change in household energy spend from installing new low-carbon technologies. 0% implies no change when moving from a gas boiler. ASHP = Air Source Heat Pump. GSHP = Ground Source Heat Pump. r The average levelised cost of heating from 2018 to 2030 were taken for each technology for commercial users. It is assumed the relative change in these costs is a sensible indicator of domestic household heating costs. The cost includes capital costs, maintenance costs and fuel costs, and a carbon price in line with the CCC pathway for reaching UK climate targets. s The average levelised costs from 2018 to 2030 for each technology were divided by the average levelised cost for gas boiler (on-gas grid homes) and oil boilers (off-gas grid homes). t All on-gas grid homes and all off-gas grid homes that were not already electric or biomass switching to a lowcarbon technology. The results from these calculations are a theoretical exercise and show the extremes of costs if one low-carbon technology is selected. This method does not use systems modelling or any optimisation. u Note: this is a simple modelling calculation and the limitations and assumptions used should be carefully considered and understood. It considers extremes in an attempt to spark discussion on 50 what potential futures may look like, not to predict the future with any given level of certainty. 4.4 Current status and future targets for non-domestic buildings

u 4.4.1 Non-domestic GHG emissions FigureApart 4.11: from Estimated the GHG average reduction change target, in energy very spend by region when switching to an air source heat pump. few targets exist for non-domestic buildings. Non-domestic buildings are behind on This further reflects the relatively slow the reductions needed to be on-track 4.4progress Current towards status emissions and reductions future targets for non-domestic buildings for the 2030 target. The high level of in the non-domestic building sector. electrification (see Section 1.3) in non- 4.4.1 Non-domestic GHG emissions domestic buildings means that direct emissions are relatively low compared to domestic and other sectors.

Figure 4.12: Barometer for direct GHG emissions in Non-domestic buildings.1,2,3 1 ,1,2,3 The reduction of Figure 4.12: Barometer for direct GHG emissions in Non-domestic buildings. Jansen, Malte 6/11/18 22:32 direct non-domestic buildings Comment [6]: FIX

emissions is not on-track u Note: this is a simple modelling calculation and the limitations and assumptions used should be carefully consideredNon-domestic and understood. buildings It considers are behindextremes onin an the attempt reductions to spark discussionneeded onto whatbe on-track potential futures for the may to meet 2030 targets. look like, not to predict the future with any given level of certainty. 2030 target. The high level of electrification (see Section 1.3) in non-domestic

96 buildings means that direct emissions are relatively low compared to domesticBuildings and other sectors.

There are large proportions of non-domestic general older buildings with lower heating 4.4.2 Energy usage in The reduction of direct non-domestic buildings emissions is not non-domestic buildings buildings without gas meters. However,on-track to meet 2030efficiencies targets. that are more likely to be public (yellow) and commercial (red) connected to the gas grid, therefore require The current status of energy supply to buildings used as much electricity as natural high gas demands. Commercial buildings non-domestic buildings can be seen by gasApart in 2016 from (43.8% the andGHG 43.4% reduction share target,of veryare few more targets likely to exist use airfor conditioning non-domestic and using electricity and gas meters as a proxyv primarybuildings. energy This consumption, further reflects respectively). the rela tivelyelectric slow heating progress units totowards satisfy theiremissions heating reductions in the non-domestic building sector. (Figure 4.13). This shows that those buildings with access demands. The average for the non-domestic to gas have high gas consumption. Public sector (orange) varies by application and is Non-domestic buildings in South England, buildings4.4.2 Energyused more usage gas than in non-domestic electricity; the buildingsalways between the public and commercial Scotland and Wales are more highly electrified oppositeThe current is seen status in commercial of energy buildings. supply to It non-domesticshare. buildings can be seen by using v than the northern regions, meaning the latter’s is assumedelectricity that and public gas meters buildings as area proxy in (Figure 4.13). commercial and public sectors are more susceptible to changes in electricity prices. Further electrification of this sector would result in direct emissions reductions, sectors are more susceptible to changes in electricity prices. Further electrification however, this would only result in overall of this sector would result in direct emissions reductions, however, this would only emission reductions if the power sector result in overall emission reductions if the power sector carbon intensity targets are carbon intensity targets are reached. The reached. The cost of this electricity depends on the technologies in the grid mix and cost of this electricity depends on the the supply-demand balance of electricity. Possible rises in electricity costs in the technologies in the grid mix and the future leave the highly electrified regions more open to cost increases. However, if supply-demand balance of electricity. strong carbon pricing is implemented the same could happen to the regions with Possible rises in electricity costs in the future low-electrification. leave the highly electrified regions more open to cost increases. However, if strong carbon There is a large proportion of solely electric non-domestic pricing is implemented the same could buildings, especially in London, the South East and the North West. happen to the regions with low-electrification. FigureFigure 4.13: 4.13: The numberThe number of non-domestic of non-domestic electric electric and gas and meters gas meters in each in regioneach region with the with share the ofshare solely of electricsolely electric properties. 23,24 properties.23,24

Non-domestic buildings in South England, Scotland and Wales are more highly electrified than the northern regions, meaning the latter’s commercial and public

There is a large proportion of v It is assumed that: Every building or non-domestic unit has an electric meter; every building with a gas meter uses gas for energy services but also uses electricity. i.e. there is no gas-only supply; and there is no sharing of solely electric non-domestic meters between buildings.

buildings, especially in London, the South East and the North Energising Britain 97

West.

FigureFigure 4.14: Final4.14: energy Final energyconsumption consump in 2016tion in of 2016 Public, of CommercialPublic, Commercial sub-sectors sub-sectors and the totaland thenon-domestic total non-domestic sector, as a % of 25 total sector,energy consumptionas a % of total by energy (sub-)sector. consumption25 by (sub-)sector. v It is assumed that: Every building or non-domestic unit has an electricThere meter; every are building large with proportions a gas meter uses ofgas for non-domestic energy services but buildings also uses electricity. without i.e. there gas is no meters. gas-only supply; and there is no sharing of meters between buildings. 51 However, public (yellow) and commercial (red) buildings used as much electricity as natural gas in 2016 (43.8% and 43.4% share of primary energy consumption, respectively). This shows that those buildings with access to gas have high gas consumption. Public buildings used more gas than electricity; the opposite is seen in commercial buildings. It is assumed that public buildings are in general older buildings with lower heating efficiencies that are more likely to be connected to the gas grid, therefore require high gas demands. Commercial buildings are more likely to use air conditioning and electric heating units to satisfy their heating demands. The average for the non-domestic sector (orange) varies by application and is always between the public and commercial share.

98 Buildings

4.4.3 Non-domestic energy efficiency

As with domestic buildings, energy efficiency ratings. So, it is assumed that the energy efficiency (Figure 4.15). This results in the is a key part of impacting the economic and efficiency ratings of non-domestic buildings non-domestic energy efficiency target climate performance of the non-domestic need to reach the same target by 2030, being not on-track to reach 2030 targets. sub-sector, together with the type of and4.4.3 at the Non-domestic same rate, as domestic energy energy efficiency energy and technologies supplying energy services to buildings that were discussed above. Currently, 36% of non-domestic properties have EPC ratings of at least a

C. There are no targets or modelling that exist for non-domestic energy efficiency FigureFigure 4.15: 4.15: Barometer Barometer for energyfor energy efficiency efficiency in non-domestic in non-domestic buildings. buildings.26 26

As with domestic buildings, energy efficiency is a key part of impacting the economic and climate performance of the non-domestic sub-sector, together with the type of energy and technologies supplying energy services to buildings that were discussed above. Currently, 36% of non-domestic properties have EPC ratings of at least a C. There are no targets or modelling that exist for non-domestic energy efficiency ratings. So, it is assumed that the energy efficiency ratings of non-domestic buildings need to reach the same target by 2030, and at the same rate, as domestic energy efficiency (Figure 4.15). This results in the non-domestic energy efficiency target being not on-track to reach 2030 targets.

Energising Britain 99

52 4.5 Implications for business costs and competitiveness

The characteristics of the regions’ of non-domestic buildings and the commercial composition and the installation of more efficient technologies energy system can have implications could see a decrease in the energy on the competitiveness of spend in these properties, bringing businesses in the region due to economic benefit to the commercial commercial and public sector and public entities that use them. costs. Spend on energy as a proportion of the region’s Gross Value Added (GVA) was calculated (Figure 4.16)w. All commercial and public activities were included in the GVA27.

The southern regions spend a less on energy per economic output than northern regions. London spends the least and Wales spends the most.

In general, the northern regions of England and Wales spend more on energy per economic output compared to Scotland and the southern regions of England. London has the lowest energy spend per GVA in Britain. Business sectors, such as financial services, tend to have very high GVA outputs with low energy Figure 4.16: Change from national average of energy spend as a proportion of commercial GVA. spend requirements in office buildings. Conversely, non-metropolitan regions tend to have less of these high-yield, low-energy spend business sectors. For example, energy spend per GVA in Wales is significantly higher than the rest of Britain and is due to low GVA from its commercial and public sectors, as well as relatively high energy spend. Comparatively, the North East has the smallest commercial and public GVA but a lower energy spend than Wales.

These high-energy, low-output regions will be more susceptible to changes in energy cost, with profit margins of the non-domestic commercial building occupants, potentially greatly affected. The region that are most at risk are the northern regions of England, the Midlands and Wales. The future cost of energy for non-domestic buildings depends on the level of electrification and the effect of transformations in the power sector and other consuming sectors on electricity prices as well as the prices of other fuels. w Energy spend calculated through same method as Increases in the energy efficiency in domestic household energy spend in Figure 4.8.

53 4.6 References

1 Department for Business, Energy & Industrial Strategy (2018): Final 15 Committee on Climate Change (2016): Fifth carbon budget dataset UK greenhouse gas emissions national statistics 1990-2016. - Domestic sheet. https://www.theccc.org.uk/publication/ https://www.gov.uk/government/statistics/finaluk-greenhouse- fifth-carbon-budget-dataset/ gas-emissions-national-statistics-1990-2016 16 Ofgem (2018): Domestic Renewable Heat Incentive Quarterly 2 Department for Business, Energy & Industrial Strategy (2018): Statistics – June 2018. Provisional UK greenhouseics 2017. https://www.gov.uk/ 17 Ofgem (2018): Domestic Renewable Heat Incentive – Annual government/statistics/provisional-ukgreenhouse-gas-emissions- Report (April 2017-March 2018) – July 2018. national-statistics-2017 18 Department for Business, Energy & Industrial Strategy (2018): 3 Committee on Climate Change (2015): Fifth Carbon Budget Average unit costs and fixed costs for gas for GB regions (QEP Sectoral Analysis. https://www.theccc.org.uk/wp-content/ 2.3.4). https://www.gov.uk/government/statistical-data-sets/ uploads/2015/11/Sectoral-scenarios-for-the-fifthcarbon-budget- annual-domestic-energy-pricestatistics Committee-on-Climate-Change.pdf 19 Department for Business, Energy & Industrial Strategy (2018): 4 Department for Business, Energy & Industrial Strategy (2017): Average unit costs and fixed costs for electricity for UK regions Energy Consumption in the UK – table 3.02. https://www.gov.uk/ (QEP 2.2.4). https://www.gov.uk/government/statistical-data- government/collections/energy-consumptionin-the-uk sets/annual-domestic-energy-pricestatistics 5 National Grid (2018): Future Energy Scenarios 2018. 20 Department for Business, Energy & Industrial Strategy (2017): http://fes.nationalgrid.com/ Regional and local authority electricity consumption statistics. 6 Scottish Government (2018): Using less energy. https://www.gov.uk/government/collections/sub-national- https://www.gov.scot/Topics/Business-Industry/Energy/ electricity-consumption-data make-the-difference/using-less-energy 21 Department for Business, Energy & Industrial Strategy (2017): 7 NHBC (2017): New Homes Statistics Annual Review 2017. Regional and local authority gas consumption statistics. http://www.nhbc.co.uk/cms/publish/consumer/Media-Centre/ https://www.gov.uk/government/collections/subnational-gas- Downloads/2017-Annual-Stats.pdf consumption-data

8 Department for Business, Energy & Industrial Strategy (2018): Fuel 22 Committee on Climate Change (2015): Fifth Carbon Budget poverty detailed tables 2018. https://www.gov.uk/government/ Sectoral Analysis. p70. https://www.theccc.org.uk/wp-content/ statistics/fuel-poverty-detailed-tables-2018 uploads/2015/11/Sectoral-scenarios-for-the-fifthcarbon-budget- Committee-on-Climate-Change.pdf 9 Scottish Government (2017): A new definition of fuel poverty in Scotland: review of recent evidence. https://beta.gov.scot/ 23 Department for Business, Energy & Industrial Strategy (2017): publications/new-definition-fuel-poverty-scotlandreview-recent- Regional and local authority electricity consumption statistics. evidence/pages/17/ https://www.gov.uk/government/collections/sub-national- electricity-consumption-data 10 Welsh Government (2016): The Production of Estimated Levels of Fuel Poverty in Wales 2012-2016. https://gov.wales/docs/caecd/ 24 Department for Business, Energy & Industrial Strategy (2017): research/2016/160711-production-estimatedlevels-fuel-poverty- Regional and local authority gas consumption statistics. wales-2012-2016-en.pdf https://www.gov.uk/government/collections/subnational-gas- consumption-data 11 Property Industry Alliance (2017): Property Data Report 2017. https://www.bpf.org.uk/sites/default/files/resources/PIA- 25 Department for Business, Energy & Industrial Strategy (2018): Property-Data-Report-2017.PDF Energy Consumption in UK Statistics. https://www.gov.uk/ government/statistics/energy-consumption-in-the-uk 12 Office for National Statistics (2011): 2011 Census data - Table QS415EW. https://www.ons.gov.uk/file?uri=/peoplepopulation 26 Ministry for Housing, Communities and Local Government (2018): andcommunity/populationandmigration/populationestimates/ Live tables on Energy Performance of Buildings Certificates – Table datasets/2011censuskeystatisticsandquickstatisticsforwards A. https://www.gov.uk/government/statistical-data-sets/ andoutputareasinenglandandwales/r22ewrttableqs415ewladv1 live-tables-on-energyperformance-of-buildings-certificates _tcm77-296596.xls 27 Office for National Statistics (2016): Regional Gross Value Added 13 Committee on Climate Change (2017): ‘UK climate action has (Income Approach) by Local Authority in the UK. reduced emissions without increases in household energy bills’. https://www.ons.gov.uk/economy/grossvalueaddedgva/ https://www.theccc.org.uk/2017/03/16/uk-climateaction-has- bulletins/regionalgrossvalueaddedincomeapproach/ reduced-emissions-without-increases-in-household-energy- previousReleases bills/

14 Element Energy, E4tech (2018): Cost analysis of future heat infrastructure. https://www.nic.org.uk/publications/cost-analysis- of-future-heat-infrastructure/

54 Section 5: Energy in industry

5.1 Overview 5.2 Current Status The transition in industry is very much economics-led, with the variety of Industry is a difficult sector to The energy transition in the industrial processes, business structures transform, as there are many industrial sector is generally more and international competition making it economic and technological complex than in other sectors. difficult to prescribe targets and blanket barriers and there are no robust Some industrial processes are regulation. There are far fewer targets that targets for the industrial sector’s very energy intensive, especially can be formed into metrics when compared energy transition, beyond GHG those that use high temperatures, with the power, transport and buildings reduction. As a whole, British so their decarbonisation is sectors. As 35% of the industrial sector’s industry has decoupled its difficult because electric power energy corresponds to a third of total economic growth from the emission does not always make economic electricity produced, a substantial increase of GHGs, currently placing it on sense for these applications. in electrification could have a large effect track to reach climate targets. on overall electricity demand, affecting the Britain has also seen much of its energy- electricity market. There are trends that Absolute electricity use in industry has intensive industry dwindle, moving to are driving electrification for industry, such stayed constant, while its share has other countries where energy is cheaper. as automation and pressure from climate increased, as processes have been Final products are increasingly imported, targets to reduce emissions. However, electrified and efficiency increases have with a risk of ‘carbon leakage’a which there are also other transformations been implemented. The top 10 energy is not considered in this report. industry can make to reduce its direct consuming industries have varying degrees emissions, such as the implementation of of electrification. At this point, many carbon capture use and storage (CCUS). processes have been optimised for cost. Therefore, the industrial sector has It is theoretically possible to increase Industry is a difficult industry huge potential for change although the electrification but this will increase energy to transform, as there exact direction is still yet to be seen. costs significantly. This would make are many economic and British industry uncompetitive unless technological barriers. carbon pricing revenue is recouped.

North West, Midlands and South East are most at risk to losing jobs because of automation as these are the most industrialised areas in the country. Over 500,000 jobs are at risk in manufacturing, mining and quarrying, water and waste (see section 5.3.2), which would have significant impacts on the energy demand of the industrial sector.

55 The transition in industry is very much economics-led, with the variety of industrial processes, business structures and international competition making it difficult to prescribe targets and blanket regulation. There are far fewer targets that can be formed into metrics when compared with the power, transport and buildings sectors. The option of increased electrification in industry alongside other sectors would increase demand for electricity. As 35% of the industrial sector’s energy corresponds to a third of total electricity produced, a substantial increase in electrification could have a large effect on overall electricity demand, affecting the electricity market. There are trends that are driving electrification for industry, such as automation and pressure from climate targets to reduce emissions. However, there are also other transformations industry can make to reduce its direct emissions, such as the implementation of carbon capture and storage (CCS). Therefore, the industrial sector has huge potential for change although the exact direction is still yet to be seen.

5.2.1 Industrial sector emissions and energy use GHG emissions in industry have approximately halved since 1990 (Figure 5.1). The 5.2.1 Industrial sector emissions and energymining use of coal and lignite, petrochemical manufacturing and waste services have significantly reduced their emissions, although this is mainly caused by decreases in industrial activity in these sectors. GHG emissions in industry have approximately halved since 1990 (Figure 5.1). The mining of coal and lignite, petrochemical manufacturing and waste services have significantly reduced their emissions, although this is mainly Figure 5.3: Barometer of industrial GHG emissions showing progression towards 2030 target. caused by decreases in industrial In 2017, the industrial sector emitted 105 MtCO e, down from 117 MtCO e in 2008. activity in these sectors. 2 2 Figure 5.4 illustrates that there has not been an absolute increase of electricity use in industry, which has remained fairly constant since 2002. The complexity of industrial change means that electrification of industries may be taking place Greenhouse gas emissions Figure 5.3: Barometerwithout of industrial it reflectingGHG emissions in showing an increaseprogression towardsin electricity 2030 target. consumption. Any efficiency

are decoupled from increases could1 also be masking an increase in electrification of industry; the high- FigureFigure Figure5.1: GHG 5.1: 5.3: emissions GHG Barometer emissions from of industryindustrial from industry 1990-2016. GHG 1990-2016. emissions1 showing progression towards 2030 target. economic growth in Britain’s In 2017, the industriallevel data sector available emitted cannot 105 resolve MtCO 2thesee, down factors fromb . 117 MtCO2e in 2008. Figure 5.3: Barometer of industrial GHG emissions showing progression towards 2030 target. industrial sector. In 2017, theFigure industrial 5.4 illustrates sector emitted that there 105 MtCOhas not2e, beendown an from absolute 117 MtCO increase2e in 2008.of electricity use While economic output in industryFigure 5.3: has Barometer of industrial GHG emissions showing progression towards 2030 target. In 2017, the industrialFigure 5.4 sector inillustrates industry, emittedGreenhouse that which 105 there MtCO gashas has emissions 2e, remainednot down been from areanfairly decoupledabsolute117 constant MtCO increase2 frome insince 2008. of 2002. electricity The usecomplexity of been increasing since 1990, greenhouse industrialeconomic change growth means in thatBritain’s electrification industrial ofsector industries may be taking place In 2017,Figure the industrial5.4 illustratesin industry,sector that emitted therewhich 105has has MtCOnot remained been2e, down an fairlyabsolute from constant 117 increase MtCO since2 eof in electricity 2002.2008. The use complexity of gas emissions linked to industry have Figure in5.4 industry, illustrates whichindustrial that therehas changewithout remainedhas not means itbeen fairlyreflecting anthat constant absolute electrificationin an sinceincrease increase 2002. of electricity industriesinThe electricity complexity usemay consumption. beof taking placeAny efficiency been decreasing. Industrial emissions in industry,industrial which change withouthas remainedmeans it increasesreflecting that fairly electrification could constantin an also increase sincebe of masking industries2002. in electricity anThe increasemay complexity beconsumption. intaking electrification of place Any ofefficiency industry; the high- intensityWhile economic normalised output by in grossindustry value has added Energising Britain b 105 industrialwithout change it reflectingmeans increases that incouldlevel electrificationan alsodataincrease beavailable masking inof electricity industriescannot an increase resolve consumption.may inthese beelectrification taking factors Any place. efficiency of industry; the high- been increasing since 1990, greenhouse b (GVA), has decreased since 1990without (Figureincreases it reflecting couldlevel inalso dataan be increaseavailablemasking cannotinan increaseelectricity resolve in consumption.electrificationthese factors .ofAny industry; efficiency the high- gas emissions linked to industry have been b 5.2) – a decoupling of growthincreases leveland could data also available be masking cannot anresolve increase these in factorselectrification. of industry; the high- decreasing. Industrial emissions intensity emissions. It is likely that a portionlevel dataof the available cannot resolve these factorsb. decreasenormalised in by emissions gross value was added linked (GVA), to the greeninghas decreased of sinceenergy 1990 use,(Figure as energy consumption5.2) – a decoupling remained of growth relatively and emissions. stable untilIt is likely2006, that awhile portion emissions of the decrease decreased 5 2 Figure 5.4: Consumption by fuel type for industrial sector 2002-2016. duringin emissions that was time linked. to Thethe greeningsubsequent FigureFigure 5.2: 5.2: GHGGHG emissionsemissions per per Gross Gross Value Value Added. Added.3 3 emissionsof energy use,decrease as energy is consumptionlikely due to an Whilst there has been a reduction in solid fuel use in most other sectors, industry interplayremained ofrelatively less carbon stable until intensive 2006, while energy still relies uponFigure it for5.4: Consumptiona significant by fuel proportion type for industrial of its sector energy consumption, with solid 2002-2016.5 useemissions and decreased increased during that time2.energy The fuel’s absolute energy consumption staying relatively constant since 2002. Total energy consumption reduced around the financial crash and has never recovered, efficiency.subsequent However, emissions decreasedespite economicis likely growth from 1990, changes to the carbon due to an interplay of less carbon intensive signalling that this either caused a transition5 in industrial processes or some of – intensity are also a result of the change in composition ofFigure industry, 5.4: Consumption with Britishby fuel type for industrial sector 2002-2016. the mainly natural gas and5 oil consuming – industries have closed down. energy use and increased energy efficiency. Figure 5.4: Consumption by fuel type for industrial sector 2002-2016. industry moving away from some more carbon intensiveWhilst industries there has (such been asa reduction in solid fuel use in most other sectors, industry However, despite economic growth from 5 steelmaking) to less carbon intensive Figureones. 5.4: Consumption by fuel type for industrial sector 2002-2016. Whilst therestill has relies been upon a reduction it for a significantin solid fu elproportion use in most of its other energy sectors, consumption, industry with solid b 5 1990, changes to the carbon intensityFigure are 5.4: Consumption by fuel type for industrial sector 2002-2016. Note the dataset on energy consumption by end-use does not include all UK industries. This is due to how the Whilst there hasstill beenrelies auponfuel’s reduction itabsolute for ina significantdatasolid energy is collected,fuel useconsumptionproportion whereby in most 6,000 of other stayingUKits industries energy sectors, relatively are consumption, aske industryd toconstant provide informationwith since solid on2002. their howTotal they consume also due to the changing composition of electricity. Based on these responses, estimated total consumption for UK industries is calculated. Therefore, for Whilst stillthere relies hasFigureFigure uponbeen fuel’s5.3: itaBarometer Barometer for reductionabsolute a significantenergyof ofindustrial industrial inenergy solidconsumption GHG proportion GHG fuconsumptionemissionsel emissionsuse showing reducedinof most itsshowing stayingprogression energy otheraround progression relatively consumption,towardssectors, the towards2030financial industryconstant target. 2030 with crash target. sincesolid and 2002. has never Total recovered, industry, Industrywith British has moving seen away substantial from decreases in GHG emissions and industriesis where data is not collected, there is no relevant dataset that estimates the split between end-use still reliesfuel’s upon absolute it forenergy aenergy significant consumption consumptionsignalling proportion thatreduced stayingconsumption thisof its aroundeither energyrelatively. causedthe consumption, ficonstantnancial a transition crashsince with inand 2002.solid industrial has Total never processes recovered, or some of – some more carbonon-track intensive to reach sectors 2030 (such targets. as This has been achieved by a fuel’s absoluteenergy Inconsumption energy 2017,signalling consumptionthe reduced industrial thatthe mainlythis aroundstaying eithersector natural the relatively causedemitted fi gasnancial anda constanttransition105 crashoil consumingMtCO and sincein2 e, hasindustrial down 2002. –never industries from Totalprocessesrecovered, 117 have MtCO closedor some2e down.in of 2008. – mixture of emission reductions measitsures energy as wellconsumption as the relocation from fuelsEnergising such Britain Whilst there has been a reduction in solid 107 steelmaking) to less carbon intensiveenergy ones.signalling consumptionFigure thatthe reducedthis5.4 mainly illustrateseither around natural caused thatthe gas a fiandtransitiontherenancial oil hasconsuming crash in not industrial and been –has industries an processesnever absolute recovered,have or increase closedsome ofdown. of– electricity use of industry to otheras countries coal, oil or natural gas to electricity, the fuel use in most other sectors, industry still

signallingthe thatmainlyin this industry,natural either gas caused which andb oila hastransitionconsuming remained in – industrialindustries fairly processes constanthave closed orsince down.some 2002. of – The complexity of process is essentially Note consideredthe dataset on toenergy be consumption byrelies end-use upon does it notfor includea significant all UK industries. proportion This is dueof to how the data is collected, whereby 6,000 UK industries are asked to provide information on their how they consume the mainly naturalindustrial gasb and change oil consuming means – industriesthat electrification have closed down.of industries may be taking place emissions Note thefree. dataset Itelectricity. is possibleon energy Based consumption to on then these say responses, by end-use estimated doesits not energy totalinclude cons consumption,allumption UK industries. for UK Thisindustrieswith is soliddue is to calculated. fuel’show the Therefore, for data is collected,industries whereby where 6,000 data UK industriesis not collected, are aske thered to isprovide no relevant information dataset on that their estimates how they the consume split between end-use b without it reflecting in an increase in electricity consumption. Any efficiency The CCC Fifth Carbon Budget provides Note a 2030the datasetthat target some electricity.on energy forof theconsumptionBasedindustrial consumptionemissions on these by emissions responses,end-use. decrease does estimated notcanat include80 total all cons UKabsoluteumption industries. for energy ThisUK industries is due consumption to howis calculated. the staying Therefore, for Industry has seen substantial data is collected, wherebyindustries 6,000 where UK data industries is not collected,are asked thereto provide is no informationrelevant dataset on their that how estimates they consume the split between end-use b Note the dataset onincreases energy consumption could by also end-use be does masking not include an all UKincrease industries. inThis electrification is due to how the of industry; the high- MtCO2e of direct emissions per year. electricity.When usingBasedbe linked on consumptionCCC these to data responses,fuel. switching to estimatedform toa totalelectricity.2017 cons target,umption for UK industriesrelatively is calculated. constant Therefore, since 2002. for Total decreases in GHG emissionsdata is collected,andindustries whereby where data6,000 is UKnot industries collected,Energising arethere aske is Britaindno to re providelevant datasetinformation4 that onestimates their how theb they split consume between end-use 107 British industry is ahead of schedule in abatinglevel data direct available emissions cannot (Figure resolve 5.3) these. factors . electricity.consumption Based on these. responses, estimated total consumption for UK industries isenergy calculated. consumption Therefore, for reduced around the However,is on-track this totarget reach does 2030 notindustries targets.consider where the data isemissions notEnergising collected, associatedthere Britain is no relevant with dataset electricity that estimates the split between end-use 107 consumption . In 2017, the industrial sector emitted 105 financial crash and has never recovered, usage.This Therefore, has been if industry achieved is switching by aEnergising its energy Britain consumption from fuels such as 107 MtCO2e, down from 117 MtCO2e in 2008. signalling that this either caused a transition mixture of emission reductionsEnergising Britain 107 coal, oil or natural gas to electricity, the processFigure 5.4is illustratesessentially that considered there has not to be in industrial processes or some of – the measures as well as the relocation emissions free. It is possible to then say thatbeen some an absoluteof the emissions increase of decrease electricity can mainly natural gas and oil consuming of industry to other countries. be linked to fuel switching to electricity. use in industry, which has remained fairly – industries have closed down. constant since 2002. The complexity of industrial change means that electrification of industries may be taking place without it The CCC Fifth Carbon Budget provides a reflecting in an increase in overall electricity 1062030 target for industrial emissions at 80 Industry consumption. Any efficiency increases MtCO e of direct emissions per year. When 2 could also be masking an increase in using CCC data to form a 2017 target, electrification of industry; the high-level data b Note the dataset on energy consumption by end-use does British industry is ahead of schedule in not include all UK industries. This is due to how the data is available cannot resolve these factorsb. 4 collected, whereby 6,000 UK industries are asked to abating direct emissions (Figure 5.3) . 5 Figure 5.4: Consumption by fuel type for industrial sector 2002-2016.provide information on their how they consume electricity. However, this target does not consider Based on these responses, estimated total consumption the emissions associated with electricity Whilst there has been a reduction in solid fuforel UK use industries in most is calculated. other Therefore, sectors, for industries industry where data is not collected, there is no relevant dataset usage. Therefore, if industry is switching still relies upon it for a significant proportionthat of estimates its energy the split betweenconsumption, end-use consumption. with solid fuel’s absolute energy consumption staying relatively constant since 2002. Total 56 energy consumption reduced around the financial crash and has never recovered, signalling that this either caused a transition in industrial processes or some of – the mainly natural gas and oil consuming – industries have closed down.

b Note the dataset on energy consumption by end-use does not include all UK industries. This is due to how the data is collected, whereby 6,000 UK industries are asked to provide information on their how they consume electricity. Based on these responses, estimated total consumption for UK industries is calculated. Therefore, for industries where data is not collected, there is no relevant dataset that estimates the split between end-use consumption.

Energising Britain 107

5.2.2 The top 10 consuming industries The manufacture of coke and petroleum products and non-metallic mineral products have the lowest electrification. The top ten energy consuming industries have a large variety in the 5.2.2 The top 10 consuming industries Some further electrification in these percentage of electricity usage (Figure 5.5). Each industry will have The top ten energy consuming industries have a large variety in the percentage of sub-sectors, if technologically feasible, a theoretical maximum electrification potential, due to technological electricity usage (Figure 5.2). Each industry will have a theoretical maximum could help to reduce industrial emissions barrierselectrification as well potential, as system due integrationto technological barriers barriers (whereby as well as asystem certain integration as these are high consuming sectors. processbarriers may (whereby depend a certain on another process may process depend using on another a certain process fuel). using a certain Similarly, chemical and food production fuel). electrification would also be beneficial. Water services are almost completely electrified already, this is due to the processes relying mainly on electric pumps.

Some of the highest energy consuming industrial sub- sectors have low electricity consumption, showing that if further electrification could

FigureFigure 5.5: Consumption 5.5: Consumption of top of 10 top industrial 10 industrial consuming consuming sub-sectors sub-sectors and and their th penetrationeir penetration of electrification. of electrification.5 5 be applied it would yield large carbon reductions. The manufacture of coke and petroleum products and non-metallic mineral products have the lowest electrification. Some further electrification in these sub-sectors, if technologically feasible, could help to reduce industrial emissions as these are high consuming sectors. Similarly, chemical and food production electrification would also be beneficial. Water services are almost completely electrified already, this is due to the processes relying mainly on electric pumps. 5.2.3 Industry by region

Some of the highest energy consuming industrial sub-sectors have There is regionallow electricity variation consumption, in the showing that if further electrification number of industrialcould be companies applied it would yield large carbon reductions in Britain, with the North East and Wales having the fewest companies (Figure5.2.3 5.6), Industry whereas, by region the highest numberThere isare regional in the variation South inEast, the numberWest of industrial companies in Britain, with the MidlandsNorth East and and the Wales North having West. the fewest companies (Figure 5.6), whereas, the highest number are in the South East, West Midlands and the North West. In In general, the number of companies and the 108amount of turnover is linked, although Industry some regions perform better than others. The northern regions of England (except the North East) are much more industrialised than the southern regions. The South East is the only southern region that is above the national average on all three metrics. Wales and Scotland are both below the 6, c national averages, although there is a high Figure 5.6: Number of industrial jobs, total turnover from industry and number of industrial companies in each GB region. number of jobs in Scotland compared to the number of companies and turnover. Therefore, changes in industry such as automation or continued changes to industrial composition to reduce emissions would affect the northern regions of England most strongly.

Fluctuations in energy prices for industry could also strongly influence the economies of these regions. Significant fluctuations may become more common as the energy system continues in its transformation. c Yearly turnover rates for industry are provided in bands (e.g. number of companies by region turning over £0-£49,000 per year). The estimate multiplied the number of companies of each band by the middle value of each band, except for the final band where the minimum value was selected, as the band is 5000+. The estimated number of jobs in industry in each region is estimated in a similar way as yearly turnover rate (i.e. middle value of each band). This means that companies over 5000 may have an effect on the accuracy of the data.

57 5.3 Implications of a transitioning industrial sector

5.3.1 Changes in energy cost from The processes for electrification are increased electrification of industry ranked in order of assumed ease of electrification, with space heating There are some processes that could 5.3being Implicationsthe easiest and low-temperature of a transitioning industrial sector theoretically be electrified such as space processes being the most difficult (of heating or drying. The potential cost to 5.3.1the processes Changes considered in energy in Figure cost 5.7). from increased electrification of industry industry if fuel consumption for certain end- If space heating, drying/separation, low There are some processes that could theoretically be electrified such as space use applications were moved from fossil- temperature processes and other end- heating or drying. The potential cost to industry if fuel consumption for certain end- based fuels to electricity is presented in use applications in industry are electrified, use applications were moved from fossil-based fuels to electricity is presented in Figure 5.7. This assumes that 1 kWh of the annual energy cost approximately electricity can provide the same thermal Figuredoubles 5.7.compared This toassumes current costs. that This 1 iskWh of electricity can provide the same thermal 7 service as 1 kWh of coal, natural gas or oil. servicelinked to lowas 1fossil kWh fuel of costs coal, compared natural gas or oil. Further, it uses 2018 fuel prices to Further, it uses 2018 fuel prices7 to estimate estimateto higher electricity the additional costs. However, cost of if completely electrifying certain end-use applications the additional cost of completely electrifying incarbon industry. prices areThe to valuesincrease reflectthis could what the total cost to British industry would be for certain end-use applications in industry. The thereduce industries the additional that running collect costs end-use of energy consumption data. This, therefore, does values reflect what the total cost to British notan electrified reflect a system,complete if the cost revenue to induis stry, but does offer an indication. industry would be for the industries that used to offset the electricity costs. collect end-use energy consumption data. This, therefore, does not reflect a complete Transforming industrial process could cost to industry, but does offer an indication. significantly increase energy costs for industry. Support through carbon pricing revenues, for example, could Transforming industrial process help to reduce these additional costs could significantly increase energy costs for industry. Support through carbon pricing revenues, Any additional capital costs of changing systems for example, could help to to electricity were excluded so the analysis only reduce these additional costs. includes the additional running costs of the end- use application. This analysis also ignores potential system interplays, whereby certain processes may provide inputs to other process Any additional capital costs of changing (e.g. through steam production). Therefore, systems to electricity were excluded so the analysis only includes the additional electrifying one end-use application may require FigureFigure 5.7: 5.7: Additional Additional cost costof fully of electrifying fully industrial greater fuel consumption downstream as the running costs of the end-use application. 8 electrifyingprocesses.8 industrial processes. This analysis also ignores potential system residual energy may no longer be present. The interplays, whereby certain processes may results are shown in Figure 5.7. provide inputs to other process (e.g. through steam production). Therefore, electrifying The processes for electrification are ranked in order of assumed ease of one end-use application may require greater electrification, with space heating being the easiest and low-temperature processes fuel consumption downstream as the being the most difficult (of the processes considered in Figure 5.7). If space residual energy may no longer be present. heating, drying/separation, low temperature processes and other end-use The results are shown in Figure 5.7. applications in industry are electrified, the annual energy cost approximately

110 Industry

58 5.3.2 Automation

The trend of automation in industry is a highly debated topic. Increased automation will have varying regional impacts, depending on the relative dependence on high risk industries. For example, PwC suggests that up to 46% of manufacturing jobs are at high risk being automated, as are 23% of jobs in mining and quarrying, and 63% in waste and water. Figure 5.8 shows the number of industrial jobs in these sectors at risk from automation by region.

Automation could aid decarbonisation but may cost hundreds of thousands of jobs. The Midlands and northern regions are most at risk.

The North West, South East and Midlands are at the greatest risk of losing jobs Figure 5.8: Number of jobs in manufacturing, mining and quarrying, water and waste at risk due to automation.9,d to automation due to the prevalence of manufacturing, water and waste management. London, the North East and Wales are the least industrialised regions and therefore the potential for automation removing industrial jobs will have less of an impact on these regions.

Outside of the socio-economic implications, an increase in industrial automation could result in increased overall energy consumption, as energy is substituted for labour. However, automation is largely linked to electrification so the carbon intensity of the power sector will determine the GHG emissions from these automated processes. Whether this increases or decreases direct emissions from industry depends on what the process emissions were before automation.

d These figures are estimated based on the number of current jobs in each sector in each region, and what the likely risk of automation of these jobs is based on the PwC report (referenced above).

59 5.4 References

1 Office of National Statistics (2018): Atmospheric emissions: greenhouse gases. https://www.ons.gov.uk/economy/ environmentalaccounts/datasets/ukenvironmentalaccounts atmosphericemissionsgreenhousegasemissionsbyeconomics ectorandgasunitedkingdom

2 Office of National Statistics (2018): Fuel use by type and industry. https://www.ons.gov.uk/economy/environmentalaccounts/ datasets/ukenvironmentalaccountsfuelusebytypeandindustry

3 Office of National Statistics (2016): GDP(0) Low Level Aggregates. https://www.ons.gov.uk/economy/grossdomesticproductgdp/ datasets/gdpolowlevelaggregates

4 CCC (2018): Progress Report to Parliament.

5 Department for Business, Energy & Industrial Strategy (2017): ECUK: Table 4.04 Table 4.04 Industrial final energy consumption by end use (different processes) 2009 to 2016. https://www.gov.uk/government/statistics/energy-consumptionin-the-uk

6 Office of National Statistics (2018): UK Business: Activity, Size and Location – 2017. https://www.ons.gov.uk/businessindustryand trade/business/activitysizeandlocation/datas ets/ukbusiness activitysizeandlocation

7 Department for Business, Energy & Industrial Strategy (2018): Table 3.1.2 Prices of fuels purchased by manufacturing industry. https://www.gov.uk/government/statistical-datasets/prices-of- fuels-purchased-by-manufacturing-industry

8 Department for Business, Energy & Industrial Strategy (2017): ECUK: Table 4.04 Table 4.04 Industrial final energy consumption by end use (different processes) 2009 to 2016. https://www.gov. uk/government/statistics/energy-consumption-in-the-uk

9 PwC (2017): UK Economic Outlook: 4 – Will robots steal our jobs? The potential impact of automation on the UK and other major economies. https://www.pwc.co.uk/economicservices/ukeo/ pwcukeo-section-4-automation-march-2017-v2.pdf

60 Section 6:

6 Section 6: Regional implications

The regional barometers in each section have shown the status of each region in Regionalmeeting their target. These have been summarised for each region in Figure 6.1. The same methodology is used for the regions as is used for each sector: counting the targets on track, within 90% on track and not on track. The following section summarises the impact of transformation on each region. The sections below occur based on the ranking of how on track the region is in its transformation, with the most on track first. The data required to build a regionalised indication of the industrial sector was not available, thus industry is excluded from this chapter. This implicationsdoes not mean there is not a specific impact that comes from the industrial energy sector, for example the vehicle manufacturing in the West Midlands or the energy-intensive industry in Tees Valley. The regional barometers in each section of this report have shown the status of Britain’s regions in transforming and future-proofing their energy systems. These results have been summarised for each region in Figure 6.1. The same methodology is used for the regions as is used for each sector: counting the number of metrics which are pushing ahead, within 90% of the target, or not on track. The following

sections summarise the progress FigureFigure 6.1: 6.1: Overall indicator indicator for for how how transformed transformed the theenergy energy system system is in isBritain’s in Britain’s regions. regions. and impacts of transforming Figure 6.2: The annual additional each region’s energy system. Gas/oil boiler Air source heat pump Additional cost per year cost of electrifying heat and transport per household Petrol/diesel Battery electric vehicle in each region, measured as the The sections below are ordered based £1,200 total cost of ownership (TCO) gap on the ranking of how well each region is between electric and conventional £1,000 technologies. For heating, the cost progressing. The data required to build a is based on conversion from gas £800 regional indication of the industrial sector boilers where possible, and from oil boilers in homes off the gas grid. was not available, thus industry is excluded £600 For vehicles, the cost is based on conversion from the regional share from this chapter. This does not mean there £400 of petrol and diesel vehicles. are not specific regional impacts that come £200 from transforming the energy supplied to £0 Britain’s industry, for example the vehicle 114 Regional implications East manufacturing in the West Midlands or the Wales London Yorkshire Scotland energyintensive industry in Tees Valley. South West South East North EastNorth West West Midlands East Midlands

In Sections 3 and 4, this report calculates conventional counterparts. Figure 6.2 Outside of London, there is a 30% spread the total cost of ownership of modern combines these to give the total additional in the cost gap, which ranges from an electric vehicle and heating technologies, cost a household in each region could extra £840 per year in the West Midlands and the gap between them and their expect to face for electrifying their heating up to £1,100 per year in Wales. The conventional counterparts. Figure 6.2 and upgrading to an electric vehicle. regions which face smaller additional combines these to give the total additional costs from electrification are generally cost a household in each region could London stands apart from other regions those in the top half of the progress league expect to face for electrifying their heating because the unique characteristics of its table (Figure 6.1), and those with the and upgrading to an electric vehicle. transport networks (the Congestion Charge, highest costs are generally falling behind. and people driving fewer miles per year) This shows that the individual regional In Sections 3 and 4, this report calculates mean the lifetime cost of owning an electric characteristics, especially socio-economic the total cost of ownership of modern vehicle is on par with petrol already. In all factors, are critical to the fair and equitable electric vehicle and heating technologies, other regions, there is still an appreciable transformation of Britain’s energy system. and the gap between them and their cost barrier to uptake of electric vehicles.

6.16.1 London London

LondonLondon hashas progressedprogressed thethe most most of development.all Britain’s London regions has seenin termsthe greatest of energyincreased BEV costs. London is on the cusp transition.of all Britain’s A strong regions driver in terms in the of region increaseis the electrificin the numberation of ofelectric/hydrogen transport. London’s of having modern electric technologies powerenergy system transition. is characterised A strong driver by havingin buses, no large with angenerators. over 15-fold The increase urbanised naturereach cost parity with incumbent fossil allowsthe region for solar is the photovoltaics, electrification although of betweenuptake 2013is low and at 2018. present. Overall, AsLondon London doesfuels. The additional costs in London are nottransport. expect London’sgrowth in power generation system capacity has, the the lowest power emissions grid fromdoes diesel not usage need to substantiallybe lower than in any other region. expandedis characterised at regional by having borders, no largebut rein forcementin rail, due to may higher well rail electrificationbe necessary in the on lower area. London as the only purely-urban region voltagegenerators. levels The within urbanised the region nature to account for electric vehicles. Overall the region is allows for solar photovoltaics, has by far the greatest number of bus stops driven and characterised by its energy consumption and not generation. although uptake is low at present. per square kilometre, allowing for a modal London has relatively high EPC ratings, sharealthough that is not dominatedas high byas privateScotland cars. and the East,As London and doeshas notthe expect lowest growth levels in of F andThis G ratings. allows London London to transition is midrange faster andin terms of more effectively, which will reduce travel fuelgeneration poverty, capacity, but thehigh power when grid doescompared not to surrounding regions. This is most likely need to be expanded at regional borders, but costs in future. due to the demographic and socio-economic structure of the southern regions. The reinforcement may well be necessary on lower housing structure has a higher electric heating rate than the rest of the country, voltage levels within the region to account for The average distance driven by each vehicle due to the high proportion of electric heating for off-gas grid homes. Despite this, electric vehicles. Overall the region is driven is substantially lower in London than any thereand characterised are very few by itslow-carbon energy consumption heating installationsother region, thusin London. giving London the lowest and not generation. total cost of ownership. London’s Congestion With the transport sector, London shows the greatest decrease in absolute and Charge – an additional tax – is not applicable relative emissions. This is likely related to efficiency gains in public transport, London has relatively high EPC ratings, to plug-in and hybrid vehicles, giving a increases in active travel and decreases in road kilometres driven. In London, although not as high as Scotland and the substantial incentive for electric vehicles. TfL whereEast, and public has the transport, lowest levels walking of F and and G cyclinreportg make that an up average a greater vehicle sharemakes 8of trips the modal split,ratings. the London emissions is midrange per personin terms offrom fuel transportvehicle peris about year into 1 thetonne congestion of CO 2chargee per year. In everypoverty, other but high region, when comparedcommuting to by privatezone car (assumed dominates, in this andstudy); so however, residents if emit 1.5 tosurrounding 2.5 times regions. that of This Londoners. is most likely due a vehicle were to travel every working day to the demographic and socioeconomic into the zone, this could increase the cost London has the highest number of electric charging points. Hydrogen refuelling structure of the southern regions. The of petrol and diesel cars by up to £3,000 stationshousing structure is even has more a higher strongly electric clustered per within year, whichLondon; would fewer further than improve half the of stations areheating outside rate than the the capital. rest of theThe country, region due has totalthe costgreatest of ownership number for plug-inof ultra-low vehicles emission busesto the highas TfL’sproportion commitment of electric heatingto electric for andin comparison.hybrid buses London has is led the onlyto rapid region uptake. Air qualityoff-gas gridissues homes. are Despite one of this, the there main are drivers in ofBritain this where development. total cost of Londonownership has for seen the greatestvery few low-carbon increase heatingin the installations number ofin electrbattery-electricic/hydrogen vehicles buses, is lower with than an petrolover 15-fold increaseLondon. between 2013 and 2018. Overall,or diesel. London London has has the a low lowest ratio of emissionsnumber from of EVs per available charging point, linked

EnergisingWith the transport Britain sector, London shows the to having a higher proportion of EV chargers 115 greatest decrease in absolute and relative and/or a smaller (absolute) number of EVs. emissions. This is likely related to efficiency gains in public transport, increases in active It is clear that railway spend was focused travel and decreases in road kilometres on London, receiving almost 45% of the driven. In London, where public transport, combined funds from national government, walking and cycling make up a greater share local authorities and private organisations. of the modal split, the emissions per person Further, almost a third of central government railway spend went to London, which from transport is about 1 tonne of CO2e per year. In every other region, commuting by alone is greater than the spending from private car dominates, and so residents emit all sources in any of the other regions. 1.5 to 2.5 times that of Londoners. Interestingly, spending correlates to the share of electrified network within the London has the highest number of electric regions, putting London, South East, charging points. Hydrogen refuelling stations North West and Scotland at the top. are even more strongly clustered within London; fewer than half of the stations are The additional cost of using a heat pump outside the capital. The region has the and electric vehicle amounts to ~£60 per greatest number of ultra-low emission buses year in London. This is mainly driven by as TfL’s commitment to electric and hybrid the additional cost of in electric heating, buses has led to rapid uptake. Air quality as opposed to other regions where the issues are one of the main drivers of this cost increase in driven mostly by the

62 6.2 Scotland Scotland

The Scottish energyenergy systemsystem reallyreally standsthe out highest from proportion the other in Britain. regions. The It is leadingThe in additional cost of using a heat pump standsseveral outareas from and the acts other as regions. an example It averagefor the energy energy spend transition is second-largest to come in in otherand electric vehicle equates to ~£990 per Scotland (largest in South East), with some year in Scotland. This is driven solely by the isregions. leading Scotland in several has areas fully and met acts half of the targets laid out in this report, joint first as an example for the energy areas spending £600 more per year when additional cost of BEVs compared to fossil with London. transition to come in other regions. compared to British average. The average fuelled vehicles, as we project a small saving Scotland has fullythe highestmet half installed of the powerScot station is spending capacity, approximately as well 3% asof the highestfrom switching to ASHP in Scotland, related targetsshare of laid renewables out in this of report, all regions. joint Onshoredisposable wind income power on dominatesenergy. This situationthe generation to the high off gas grid housing stock. has been identified, and led to the largest Compared to other regions, Scotland has firstmix, aswith this London. region offers an exceptionally good wind resource and low population deployment of efficient and low-carbon the 5th highest additional costs. density. The large increase in wind power generation has offset the phase-out of Scotland has the highest installed power heating (0.52%, or 12,300 units). This aims coal and gas, and the future closure of nuclear power. The wind industry enables station capacity, as well as the highest share to address both climate change and fuel Scotland to generate new employment and create an alternative for the oil and gas of renewables of all regions. Onshore wind poverty issues by increasing efficiency, industry. Scotland has the largest number of jobs in renewables of all regions with power dominates the generation mix, as this which makes Scots likely to be better off in regionthe potential offers an exceptionallyto continue good growin windg as thethe transition future. However, continues. this strongly depends resource and low population density. The on the technology the fuel poor homes are However, more recently political uncertainties about the future of onshore wind large increase in wind power generation has changing from and the energy efficiency of have arisen, which may stop economic development in that area. Simultaneously, offset the phase-out of coal and gas, and the homes. The economic decision to not there is considerable uncertainty for potential future nuclear power plants, as these the future closure of nuclear power. The wind build a gas grid has affected consumers industrywould increaseenables Scotland the grid to generatecongestion new alreadynegatively prevalent and raises in Scotland. questions onThe possible siting of wind employmentturbines at and the create best an windalternative resource for the locationsfuture de-carbonisation does not coincide using hydrogen. with pre-existing If oillocation and gas ofindustry. the grid,Scotland which has the was largest built heatingout many was changeddecades through ago. the Locally installation congested numberelectricity of jobs from in renewables wind power of all regions can leadof toair-sourced opportunities heat pumps for in thelocal on-gas smart grid energy withsolutions the potential and sector to continue coupling growinga of as the the electricity,homes and transp off-gasort grid and homes industrial (that are sector. not transition continues. already electric or biomass) change in energy On the buildings side, Scotland has a relativelyspend would energy-efficient decrease by 3.3% building in Scotland stock with However,the highest more proportionrecently political of EPC ratings aboveor £35 C.by 2030.At the This same is a very time, small a changerelatively high uncertaintiesproportion aboutof households the future of liveonshore in fuel poinverty: proportion 11.8% of average using householdthe English income. low income windhigh havecost arisen, (LIHC) which method. may stop One economic reason for that might be due to Scotland having the developmenthighest proportion in that area. of Simultaneously, electric heat (12.2%)In the withtransport Highlands sector Scotland reaching has the20–25%. This second highest number of electric charging therecorresponds is considerable to similar uncertainty proportions for potential of off-gas grid properties in these areas. 55% of points, only London has more electric futureScotland’s nuclear off-gaspower plants, grid ashomes these are electric, the highest proportion in Britain. The would increase the grid congestion already vehicle charging points. London, Scotland average energy spend is largest in Scotland (second to South East), with some prevalent in Scotland. The siting of wind and the South East have more than half of areas spending £600 more per year when compared to British average. The turbines at the best wind resource locations Britain’s charging points between them. At does not coincide with pre-existing location the same time Scotland has a low ratio of a Sector coupling is the interaction between different energyEVs per sectors, available where charging e.g. electricity point, is linked used to to regenerate ofheat the or grid, produce which hydrogen was built for use out in many transport. decades ago and not designed to cope having a higher proportion of EV chargers withEnergising large amounts Britain of wind power. Locally and/or a smaller (absolute) number of EVs. 117 congested electricity from wind power This means Scotland’s infrastructure is ready can lead to opportunities for local smart for greater EV uptake. Scotland is also energy solutions and sector couplinga of the second to London in the number of electric/ electricity, transport and industrial sector. hydrogen buses with an almost 6-fold increase between 2013 and 2018 and On the buildings side, Scotland has a amongst the leaders in the proportion of relatively energy-efficient building stock with Heavy Good Vehicles (HGVs) that are already the highest proportion of EPC ratings above electrified or using hydrogen. Regardless of C. At the same time, a relatively high vehicle type, the total cost of ownership is proportion of households live in fuel poverty: highest in Scotland (and Wales), while it is 11.8% using the English low income high the lowest in London. This may be affecting cost (LIHC) method. One reason for that the EV uptake in the region. Regionally for might be due to Scotland having the highest battery-electric vehicles and Plug-in hybrid proportion of electric heat (12.2%) with electric vehicles, Wales, Scotland and the Highlands reaching 20–25%. This North East face the greatest financial burden corresponds to similar proportions of off-gas when owning a vehicle. grid properties in these areas. 55% of a Sector coupling is the interaction between different energy Scotland’s off-gas grid homes are electric, sectors, where e.g. electricity is used to regenerate heat or produce hydrogen for use in transport.

63 6.3 East of England

6.36.3 East East of England of England

The east of England is the third most transformed region in Britain. A five-fold increase in grid capacity is needed for transporting electricity from offshore wind

farms to load centres inland. The building of offshore wind farms will contribute significantlyTheThe easteast of toEnglandEngland the region’s isis thethe third economy,third most whils Thetransformed tEPC at ratingsthe same areregion second time in highestreducing Britain. theA five-fold overallThe additional cost of having an ASHP and transmissionincreasemost transformed in grid length capacity region by isbeingin needed close for tointransporting thisLondon. part of the Theelectricity country. subsequent The fromsame offshore increase wind owningin a BEV is equivalent to ~£970 per goes for residential fuel poverty rates. year in the East of England. As with most employmentfarmsBritain. to A load five-fold will centres have increase inland.a significant in Thegrid buildingimpact onof offshorethe local windeconomy farms with will buildingcontribute of The southern regions effect means that regions, this cost is mostly related to the supplysignificantlycapacity chains is neededto around the region’s for the transporting industry. economy, whilst at the same time reducing the overall electric heating rates are higher than additional cost of BEVs compared to fossil transmissionelectricity from length offshore by windbeing close to London. The subsequent increase in on average. All of these factors mean fuelled ones, with ASHP accounting for Theemploymentfarms EPC to ratingsload will centres arehave second inland.a significant highest The impactin this parton theof thelocal country. economy The with same building goes forof building of offshore wind farms that the region has an advantageous less than £50 of the total additional costs. residentialsupply chains fuel around poverty the industry.rates. The southern regions effect means that electric heatingwill contribute rates are significantly higher than to on the average. starting All of point these for the factors energy meantransition. that the regionAs compared to other regions, the East has the 6th highest additional costs. hasTheregion’s anEPC advantageous ratingseconomy, are whilst second starting at highestthe po int for in thethis energy part of transition. the country. The same goes for residentialsame time fuelreducing poverty the overallrates. The southeRegionally,rn regions the West effect Midlands means and the thatEast electric of England are leading the EV uptake. At Regionally,heatingtransmission rates the arelength West higher byMidlands beingthan on and average. the East All of of England these factors are leading mean thethat EVthe uptake. region close to London. The subsequent the same time the charging point density Athas the an sameadvantageous time the starting charging po pointint for dens the ityenergy is low transition. for the number of vehicles on theincrease road, ina employment consequence will of have the successfulis low for EVthe numberroll-out. of vehicles The currenton the situation road, a consequence of the successful EV indicatesRegionally,a significant that the impactinnovation West Midlandson thearound local and smart the chEastarging of Englandcould happen are leading here, especiallythe EV uptake. when economy with building of supply roll-out. The current situation indicates that EVsAt the are same combined time thewith charging the future point of densoffshoreity is windlow forpower the fornumber balancing of vehicles services. on chains around the industry. innovation around smart charging could Thisthe road,could leada consequence to significant ofcost the saving successful for this EVregion. roll-out. The current situation happen here, especially when EVs are indicates that innovation around smart charging could happen here, especially when combined with the future of offshore wind TheEVs additionalare combined cost ofwith having the futurean ASHP of andoffs horeowning wind a BEV power is equivalent for balancing to ~£970 services. per power for balancing services. This could lead year in the East of England. As with most regions, this cost is mostly related to the This could lead to significant cost saving tofor significant this region. cost saving for this region. additional cost of BEVs compared to fossil fuelled ones, with ASHP accounting for lessThe additionalthan £50 ofcost the of total having additional an ASHP costs. and owningAs compared a BEV isto equivalent other regions, to ~£970 the East per hasyear the in the6th highestEast of additionalEngland. As costs. with most regions, this cost is mostly related to the additional cost of BEVs compared to fossil fuelled ones, with ASHP accounting for less than £50 of the total additional costs. As compared to other regions, the East 6.4has6.4 the South 6 th Southhighest West additional West costs.

6.4 South West

TheThe South WestWest isis ranked ranked joint joint thirdthe wh highesten compared electric heating to ratethe outside rest of Britain.there is a benefit to switching heating However,fourth when this compared part of the to thecountry rest facesof particularScotland and challenges. the highest number The Southof Westto isASHP, which is again related to the

of Britain. However, this part of the off-gas grid properties and the second high off gas grid household stock. The country South faces West particular is ranked challenges. joint third most wh enlow-carbon compared heating to installations. the rest of Britain. Energising Britain 119 However, The South this West part is characterisedof the country by faces particular challenges. The South West is its weak electrical connection and Whilst the South West has a relatively large

remoteness, relatively speaking. number of EV charging points, there has Energising Britain been a small uptake of EVs compared 119 Grid congestion is already present and hinders the further to the other southern regions. This has installation of solar photovoltaics. resulted in a relatively high proportion of chargers relative to EVs. The gap in total The reductions in feed-tariffs for solar PV cost of ownership for EVs in the South has affected the region negatively. It is to West is similar to that of the other southern be expected that this region will be one of regions but its lower average household the first to restart the solar boom once the income could be stopping the deployment technology can support itself ‘subsidy free’ of these vehicles. For other low-carbon – due to its relatively good solar resource, transport like buses and HGVs, the South compared to the rest of the country. West is lagging behind its targets.

The buildings have a relatively high rate The South West is among the regions with of EPC ratings of C and above but also a the lowest additional costs (3rd lowest) substantial share F and G rated buildings associated with electrification of heating (7.4%). It sees higher fuel poverty than and transport. This amounts to ~£845 per other southern regions, although still year, which is entirely from the additional cost midrange. This is certainly due to having of BEV ownership. In fact, as with Scotland,

64 characterised by its weak electrical connection and remoteness, relatively speaking. Grid congestion is already present and hinders the further installation of solar photovoltaics. The reductions in feed-tariffs for solar PV has affected the region negatively. It is to be expected that this region will be one of the first to restart the solar boom once the technology can support itself ‘subsidy free’ – due to its relatively good solar resource, compared to the rest of the country.

The buildings have a relatively high rate of EPC ratings of C and above but also a substantial share F and G rated buildings (7.4%). It sees higher fuel poverty than other southern regions, although still midrange. This is certainly due to having the highest electric heating rate outside of Scotland and the highest number of off-gas grid properties and the second most low-carbon heating installations.

Whilst the South West has a relatively large number of EV charging points, there has been a small uptake of EVs compared to the other southern regions. This has resulted in a relatively high proportion of chargers relative to EVs. The gap in total cost of ownership for EVs in the South West is similar to that of the other southern regions but its lower average household income could be stopping the deployment of these vehicles. For other low-carbon transport like buses and HGVs, the South West is lagging behind its targets.

The South West is among the regions with the least additional costs associated with electrification of heating and transport, using ASHP and BEVs, respectively. The total additional cost amounts to ~£845 per year, with all of it arising from the additional cost of BEV ownership. In fact, as with Scotland, there is a benefit to switching heating to ASHP, which is again related to the high off gas grid household stock.

6.56.5 South South East East

storage to alleviate grid congestion. This will benefit consumers, as their bills will be lower than what they could have been without these measures. TheThe SouthSouth EastEast ofof EnglandEngland isis ranked fifth.relatively The highregion when has to compared faced grid to the congestion due in to diesel usage in rail are highest in theTheranked pastSouth jointand East fourth.the hasinstallation The the regionlowest of almostEPC ratings 2national GW ofof average. thephotovoltaics southern Fuel poverty regionshas is lowestexacerbated but in it is thethestill South East despite high electrification situation.relativelyhas faced highIn grid response, whencongestion to comparedthe inregion to has the sthe eennational country the despiteaverage.largest having storage Fuel more poverty housescapacity is lowestfor newof railin and lowest spend per passenger storagecountrythe past (i.e.despite and not the higher pumped-hydro).installation electric of heating The ratesstorageoff the and gas is grid havingused the highestfor the grid highest energy balancing billsenergy and bills load journey.per It is suspected that the large flowhouseholdalmost management 2 GW in Britain.of photovoltaics by Thisthe localis mainly distribution dueper to household socio-economicnetwork. in Britain.Innovative Thisfactors is mainlyapproaches outrunning have volumefuel of journeys are the cause of this. due to socioeconomic factors and milder beencosts.has exacerbatedimplemented This should the to enable makesituation. betterconsumers use of theand existingbusinesses infrastructure, alike to e.g.invest the in use new of technologies and exploit the gains in thewinters. future. This should enable consumers and The South East has projected additional In response, the region has seen the businesses alike to invest in new technologies cost of electrifying heating and transport 120 Regional implications The South East is amongst the regionsand with exploit the the highest gains in thenumber future. of EV chargingof ~£940 per year, the 4th lowest among largest storage capacity for new storage points.(i.e. not pumped-hydro). It has high The car storage ownership is and private transport is the main modeBritain’s of regions. As with other regions, commuting.used for grid balancing Therefore, and innovative there is large potentialThe South Eastto issee amongst large the emission regions decreasesthis is mostly related to the additional throughapproaches a tomodal load flow shift management or continued by electrificationwith the highest of numberprivate of EVtransport. charging The regioncost of BEV ownership, which accounts leadsthe local on distribution the proportion network toand alleviate absolute numberspoints. It hasof HGVshigh car that ownership are already and private electrified for ~£860 of the additional yearly cost. transport is the main mode of commuting. orgrid use congestion. hydrogen. This willThe benefit emissions consumers, due to diesel usage in rail are highest in the South as their bills will be lower than what they Therefore, there is potential to see large East despite high electrification of rail and lowest spend per passenger journey. It is could have been without these measures. emission decreases through a modal shift or suspected that the large volume of journeys are the cause of this. continued electrification of private transport. TheThe SouthSouth East East has hasthe lowest projected EPC additionalThe cost region of leadselectrifying on the proportion heating and and transport, absolute numbers of HGVs that are already withratings ASHP of the andsouthern BEVs regions respectively, but it is still of ~£940 per year, making it one of the regions electrified or use hydrogen. The emissions with the lowest additional costs. As with other regions, this is mostly related to the additional cost of BEV ownership, which accounts for ~£860 of the additional yearly cost.

6.66.6 West West Midlands Midlands

TheThe WestWest MidlandsMidlands ranks ranks as as the the sixth mostThe transformedregion is midrange region. for most The buildings’ power sectorThe in West Midlands has the 2nd lowest thissixth region most transformedis changing region,most drasticallymetrics, of allfor exampleregions. in EPCIt hasratings, become but a largeadditional cost associated with heating importerplacing it ofin theelectricity middle ofin Britain’srecent yearshad due the highestto the fuel retirementpoverty rates betweenof conventional and transport electrification, behind generationleague table. and The very power little sectoruptake of renewa2012ble and capacity 2016, despite . This low means electric heatingthat the regionLondon. The total yearly cost of ~£840 rates. The combination of imported electricity is primarily due to BEV ownership isin decoupledthis region from is changing the economic most activity of the energy sector in Britain and has no and high fuel poverty rates means that (~£760), while the additional yearly cost valuedrastically creation of all and regions. jobs Itfrom has electricity generation. In future this will make the become a large importer of there may be a challenge in the future. of ASHP heating amounts to ~£85. region worse off in terms of electricity generation than it was just a few years ago. electricity in recent years due to Thethe retirementregion is midrange of conventional for most buildings’On themetrics, upside, forthe Westexample Midlands in EPCis leading ratings, but hadgeneration the highest and very fuel littlepoverty uptake rates betweenwith EV 2012penetration and at2016, 0.52% ofdespite the car low electric of renewable capacity. fleet. This growth is likely to be linked to

Energising Britain the automotive industry that is present in 121 This means that the region is decoupled the region and the fact that the total cost from the economic activity of the energy of ownership is the lowest in this region sector in Britain and has no value creation when compared to the rest of the Britain, and jobs from electricity generation. In except for London. The uptake of electric future this will make the region worse vehicles has also led to a higher EV to off in terms of electricity generation charging point ratio, suggesting greater than it was just a few years ago. competition for charging in the future. In fact, the regions performance on electric vehicles secures its position in the mid-range.

65 heating rates. The combination of imported electricity and high fuel poverty rates means that there may be a challenge in the future.

On the upside, the West Midlands is leading with EV penetration at 0.52% of the car fleet. This growth is likely to be linked to the automotive industry that is present in the region and the fact that the total cost of ownership is the lowest in this region when compared to the rest of the Britain, except for London. The uptake of electric vehicles has also led to a higher EV to charging point ratio, suggesting greater competition for charging in the future. In fact, the regions performance on electric vehicles secures its position in the mid-range.

The West Midlands, after London, has the least additional cost associated with heating and transport electrification, through ASHP and BEV use respectively, with a total yearly cost of ~£840. The additional yearly cost of BEV ownership amounts to ~£760, whereas the additional yearly cost of ASHP amounts to ~£85.

6.76.7 Wales Wales

TheThe WelshWelsh powerpower systemsystem cancan bebe characteriThe Welshsed by housing its large stock pumped-hydrois among the least storagefor battery-electric vehicles and plug-in capacitycharacterised and a bynumber its large of pumped-gas-fired powerefficient stations in Britain. in theIt has south. one of theWales lowest has by hybridfar electric vehicles. When normalised thehydro highest storage rate capacity of smart and meter a roll-out regionalof all regionsproportions . Thisof EPC will ratings enable above consumers by the total number of journeys taken in that innumber Wales ofto gas-firedbecome onepower of thestations first regionC ands withto profit9% of EPCfrom ratings the inpotential the F and benefits,same year, Wales is amongst the highest suchin the as south. demand Wales response has by activities. far the HoweveG category.r, this This may means be offset that electrification by the low incomeinvestment spend per journey on rail and of heating could increase overall energy much higher than the South East of England inhighest the region rate of which smart makes meter roll-it less likely that the necessary investment (such as out of all regions. This will enable costs. This would negatively affect the region (i.e. regions East, South East and London). electric vehicles and heat pumps) is undertaken on a large scale, unless specific consumers in Wales to become economically and could increase fuel poverty, This seems to correlate with the limited moresupport rural schemes setting are than provided. other regions This means and higher Wales drivingmay miss distances, out on the benefitsregion will of one of the first regions to profit where it currently holds a midrange position. electrification in rail and reduces the chances miss out on the benefits of electric vehicles and could pay a higher price for itsfrom smart the potentialmeter rollout benefits, in the such future whilst it has to burden the cost of rolling ofout carbon emissions reduction through electrification. Wales has a single electric bus running in Cardiff, which exemplifies millionsas demand of meters. response activities. Wales has the lowest EV penetration and the a modal shift in the transport sector. the current situation. Wales has the lowestfewest (joint charging with points, East with Midlands) only 3% of allnumber the of The Welsh housing stock is among the least efficient in Britain. It has one of the ultra-lowHowever, this emission may be offsetHGVs by and the low faces the greatestchargers beingfinancial in Wales. burden This isfor induced battery-electric by Wales suffers the highest cost associated lowest regional proportions of EPC ratings above C and with 9% of EPC ratings in vehiclesincome in andthe region plug-in which hybrid makes electricit less vehicles.the more When rural normalisedsetting than other by regionsthe total and numberwith transitioning to electric heating and the F and G category. This means that electrification of heating could increase oflikely journeys that the necessarytaken in investment that same (such year, Waleshigher driving is amongst distances. the The regionhighest will missinvestment passenger transport. The yearly additional spendoverallas electric perenergy vehicles journey costs. and onheat This rail pumps) would and muchnegatively higherout onaffect thanthe benefits the the region South of electric economically East vehicles of England and and could (i.e.cost amounts to ~£1,100, with ~£1,040 regionsincreaseis undertaken East,fuel on poverty, Southa large scale,East where unless and it cuLondon).rrently holdscouldThis pay aseems midrange a higher to price correlate position. for electrification. with the limitedrelated to the increased cost BEVs and ~£60 specific support schemes are provided. Wales has a single electric bus running related to the increased cost of ASHP. electrificationWales has the in smallest rail and EVreduces penetration, the chan whichces of iscarbon likely emissionslinked to thereduction region through having This means Wales may miss out on in Cardiff, which exemplifies the current athe modal fewest shift charging in the transport points with sector. only 3% of all the chargers being in Wales. With a the benefits of its smart meter rollout situation. Wales has the lowest (joint with

Wales,122in the future out whilstof all it hasthe toregions, burden the has the greatestEast Midlands) cost associ numberated of ultra-low withRegional transitioningemission implications to ASHP cost of heatingrolling out millionsand BEV of meters. private passengerHGVs tr andansport. faces the The greatest yearly financial additional burden cost amounts to ~£1,100, with ~£1,040 related to the increased cost BEVs and ~£60 related to the increased cost of ASHP.

6.86.8 East East Midlands Midlands

TheThe EastEast Midlands ranksis ranked eighth joint in theThe regional East Midlands comparison. has the second The greatestpower systemThe additional yearly cost of using ASHP continueseighth in theto host regional a large comparison. coal and gas caabsolutepacity, number as well and as the agreatest significant penetration renewable for heating and a BEV for private passenger andThe electricitypower system storage continues capacity. to Currentof ly,ultra-low the emissionregion buseshas intothe their second fleet. highesttransport amounts to over £1,000 in the In the East Midlands, the city of Nottingham East Midlands. This is mostly related to the transmissionhost a large coalcapacity and ofgas a llcapacity, regions. However, a smaller growth rate compared to as well as a significant renewable has been an early adopter of electric buses, ~£920 additional cost of BEV ownership. other regions further north could see the East Midlands lose this second-place and electricity storage capacity. having recently purchased a further 13 battery The East Midlands therefore ranks as the ranking. The growth in renewables and existing transmission capacity places the Currently, the region has the second electric buses to join the current 45. The East region with the 4th highest additional cost. regionhighest at transmissiona good starting capacity point to of und all ergoMidlands an electricity have the lowesttransformation. number of ultra-low emission HGVs. Despite positive Theregions. East However,Midlands ahas smaller the growthsecond greatest absolute number and the greatest rate compared to other regions movement in the transport sector, there is penetration of ultra-low emission buses into their fleet. In the East Midlands, the further north could see the East still considerable changes required to ensure city of Nottingham has been an early adopter of electric buses, having recently Midlands lose this second-place a transformation of the transport sector. purchasedranking. The a furthergrowth in13 renewables battery electric buses to join the current 45. The East Midlandsand existing have transmission the lowest number of ultra-lowThe East Midlands emission have HGVs.one of the Despite highest positive movementcapacity places in the the transport region atsector, a thereproportions is still considerableof F and G rated changesbuildings, required to ensuregood startinga transformation point to undergo of the transport resultingsector. in part in high fuel poverty rates. an electricity transformation. Electric heating uptake is low in buildings. Considerable support is required to ensure that both the energy transformation in

Energising Britain buildings can occur alongside other regions 123 and that vulnerable consumers will not be significantly financially affected.

66 The East Midlands have one of the highest proportions of F and G rated buildings, resulting in part in high fuel poverty rates. Electric heating uptake is low in buildings. Considerable support is required to ensure that both the energy transformation in buildings can occur alongside other regions and that vulnerable consumers will not be significantly financially affected.

The additional yearly cost of using ASHP for heating and a BEV for private passenger transport amounts to over £1,000 in the East Midlands. This is mostly related to the ~£920 additional cost of BEV ownership. Compared to other regions, the East Midlands ranks as the region with the 4th highest additional cost.

6.96.9 Yorkshire Yorkshire and the Humber and the Humber

RankingRanking ninth, joint eighth,Yorkshire Yorkshire and the and Humber required is characterised or a doubling byof the its grid past capacity of being homeenergy bills in Britain, fuel poverty is still tothe several Humber large is characterisedcoal power plants, by its remaining in neighbouring one of the regions. few Notably,regions the with active coalhigh. Strong intervention is required to powerpast of generation, being home and to currentlyseveral large has the regionsecond-most currently has installed one of the capacity. lowest Further,ensure as that the region’s energy transition acoal result power of Drax’s plants, conversion remaining of one four out installedof six coalcapacities units in toelectricity biomass, storage, Yorkshire andin buildings is not left behind. theof theHumber few regions has the with greatest active biomasscoal capacialthoughty recent in Britain. announcements Projections suggest indicate the Yorkshire may become a leader in this area. The additional cost of electric heating regionpower will generation, connect severaland currently offshore wind farms, generating employment during the has the second-most installed and transport is ~£950 in Yorkshire. Of construction and operation phases. This added capacity in the region will mean capacity. Further, as a result of Yorkshire has seen the greatest growth this, ~£880 is related to the additional either greater electricity storage will be required or a doubling of the grid capacity Drax’s conversion of four out of six of all regions in the number of plug-in cost of BEV ownership. This places incoal neighbouring units to biomass, regions. Yorkshire Notably, the vehicles,region havingcurrently grown overhas 200one times of its the lowestYorkshire slightly below average, ranking installedand the Humbercapacities has in theelectricity greatest storage, size although since 2011, recent albeit fromannouncements a low starting suggestthe 5th lowest cost among the regions. Yorkshirebiomass maycapacity become in Britain. a leader in this area.point. The region requires more incentives for progress in the energy transition of Yorkshire and the Humber has seen the greatest growth of all regions in the Projections indicate the region will the transport sector as it would otherwise number of plug-in vehicles, having grown over 200 times its size since 2011, albeit connect several offshore wind farms, fall behind the rest of the country. fromgenerating a low employment starting duringpoint. the The region requires more incentives for progress in the energyconstruction transition and operation of the phases. transport This sector Buildingsas it would in Yorkshire otherwise have thefall lowest behind rate the rest of theadded country. capacity in the region will mean of EPC ratings above C in the country, either greater electricity storage will be with around 7% of buildings rated at F Yorkshire buildingsand the Humber have the face lowest an additional rate andof EPC G. yearly Despite ratings cost having above of the ~£950 secondC in thewith lowest country, switching with to aroundASHP heating 7% of andbuildings BEV private rated at road F and transportation, G. Despite having of which the ~£880 second is lowestrelated energy to the billsadditional in Britain, cost offuel BEV poverty ownership. is still As high. compared Strong tointervention other regions, is required Yorkshire to andensure the thatHumber the region’sranks among energy the transition regions in with buildings the lowest is not additionalleft behind. costs of heating and transport electrification, using ASHP and BEVs.

124 Regional implications 6.106.10 North North West West

TheThe North West ranksranks tenth,tenth, its its powerThe sy Northstem West has is aone rich of the mix leading of regionscoal, gas Theand additional cost of electrifying heating nuclearpower systempower stations, has a rich as mix well as offshorefor thewind penetration power inof ultra-lowthe Irish emission sea. Further, andthe transportation amounts to ~£1,020 largestof coal, wind gas turbineand nuclear of the power world residesHGVs, in the both newly in absolute finished number Burbo and asBank a Offshoreper year in the North West. This is mostly proportion of the HGV fleet. This however related to the additional cost of BEV Windstations, Farm, as whichwell as connects offshore to an onshore substation at Wallasey, near Liverpool. wind power in the Irish sea. does not overcome the shortcomings in ownership, which stand at ~£910 per The North West was also the first region to have liquid air electricity storage, before Further, the largest wind turbine the other transport, transition metrics. year. The North West has the 2nd highest the facility was moved from Lancashire to Birmingham. The region has one of the of the world resides in the newly The region requires greater support to additional cost, behind only Wales. highestfinished employment Burbo Bank numbers Offshore in renewableensure energy that it is in not England, left behind increasingin the its long- termWind competitiveness.Farm, which connects Despite these progenergyresses transition in theof the power transport sector, sector. the region doesto an notonshore rank substationhighly amongst at the other regions in the energy transition of the powerWallasey, sector. near Liverpool. Buildings in the North West are characterised by low-midrange EPC ratings. Despite lower The North West is one of the leading regions for the penetration of ultra-low The North West was also the first region electricity prices, the cost of heating still emissionto have liquid HGVs, air electricity both in storage, absolute before number leaves and manyas a Northproportion Westerners of thefuel poor,HGV fleet. This howeverthe facility wasdoes moved not fromovercome Lancashire the shortcomindue to overallgs in lowerthe regionalother incomes.transport, This transition metrics.to Birmingham. The Theregion region requires has one ofgreater the supportis generally to ensure reflected that in all itthe is midlandsnot left behind in thehighest energy employment transition numbers of the in renewable transport sector.and northern regions. The transition to energy in England, increasing its long-term electric heating would increase energy Buildings in the North West are characterised by low-midrange EPC ratings. competitiveness. Despite these progresses bills in the regions, strongly affecting Despitein the power lower sector, electricity the region does prices, not the costalready of vulnerable, heating fuel still poor leavesconsumers. many North Westernersrank highly amongst fuel thepoor, other due regions to inoverall lower regional incomes. This is generally reflectedthe energy intransition all the of midlandsthe power sector. and northern regions. The transition to electric heating would increase energy bills in the regions, strongly affecting already vulnerable, fuel poor consumers.

The additional cost of electrifying heating, with ASHP, and transportation, with BEVs, amounts to ~£1,020 per year in the North West. As with all regions, apart 67 from London, this is related to the additional cost of BEV ownership – ~£910 per

Energising Britain 125

year. Compared to other regions, the North West ranks amongst the regions having the highest additional costs.

6.116.11 North North East East

Figure 6.3: Overall indicator on localised barometer achievements in the North East of England. FigureThe North6.2: Overall East indicator is the on least localised barometer achievementsThis absence in the of Northgeneration, East of especiallyEngland. by The region’s buildings have a relatively the mid-2020s means that an investment high EPC ratings (above C). However, it Thetransformed North East region is the in GB. least The transformed region in GB. The North East’s power in wind power could boost local economy has the second highest fuel poverty rates, systemNorth East’s is characterised power system by itsis need to triple grid transmission capacity by 2040, characterised by its need to and enhance the current the structural despite having some of the lowest energy with the possibility of connecting an offshore wind farms in the near future. The triple grid transmission capacity changes ongoing in the region. Positively, bills. There are currently very few low- largest power stations are Hartlepool nuclear power plant (1.3 GW), set for by 2040, with the possibility of the region has the second highest carbon heating units installed, and our decommissioningconnecting an offshore in the windmid-2020s, farms andsmart Lynemouth meter roll-out biomass rate in Britain. power station (400total cost of ownership calculations show MW).in the Excluding near future. biomass, The largest the North East has the lowest power station capacitythat in a change to electric heating would thepower country stations (excluding are Hartlepool London). This absenceThe North of Eastgeneration, has had the especially smallest by the mid-increase household bills in the North East 2020snuclear means power that plant an (1.3 investment GW), set in windgrowth power in the numbercould boostof registered local plug-in economy andthe most compared to other regions. enhancefor decommissioning the current the in thestructural mid- changevehicles,s ongoing with its fleetin the in 2018region. (Q1) beingPositively, the region2020s, has and the Lynemouth second highest biomass smart meter34 timesroll-out larger rate than in it wasBritain. in 2011, which The cost of switching to electric heating power station (400 MW). Excluding is only half the national growth rate. To and transport in the North East is projected Thebiomass, North theEast North has Easthad thehas smallestthe growthcompound in this,the thenumber North East of hasregistered fewer plug-into be ~£1,015 per year. This is the 3rd vehicles,lowest power increasing station its capacity fleet in 2018 (Q1)electric by and only hydrogen 34 busestimes than the it didsize in in 2011.highest cost increase across Britain’s Further,in the country the North except East London. has decreased2010. its Basednumber on total of cost electric/hydrogen of ownership busesregions, and only £2/year behind the North compared to 2010. Based on total cost calculations,of ownership battery-electric calculations, vehicles battery-electric and West. BEV ownership accounts for ~£890 vehicles and plug-in hybrid electric vehiclesplug-in place hybrid the electric greatest vehicles financial place the burdenof on this additional cost, while ASHP heating greatest financial burden on consumer of accounts for ~£125. Clearly, efforts to reduce consumer of the North East. Interestingly, the competition for charging points is the North East. Interestingly, the competition the cost premium for electric technologies amongst the lowest in Britain. Based on the total number of rail journeys taken, the for charging points is amongst the lowest in a region with below-average uptake North East in 2017 invested the most, despite its limited electrification. in Britain, meaning the stage is set for and below-average income could have The region’s buildings have a relatively highgreater EPC uptake ratings of electric (above vehicles. C). However,Based it significanthas impacts on future progress. on the total number of journeys, the North the second highest fuel poverty rates, despite having some of the lowest energy East invested the most per rail journey in bills. As there are currently very few low-carbon heating units are installed, a 2017, despite its limited electrification. change to electric heating in the future would increase energy bills the most compared to other regions.

The North East has projected additional costs of ~£1,015 per year related to switching to ASHP heating and BEV private road transportation. BEV ownership accounts for ~£890 of this additional cost, whereas ASHP heating accounts for

126 Regional implications

68 Section 7: Conclusions

This study has examined the These metrics serve as a proxy to The results from the barometers show current state of the energy transition gauge the process. For each metric we that the power sector largely on track and its likely future pathway. By identify whether it is on track, almost and in full state of transition. Further combining publicly available data on track (90% of target) or not on track. challenges lie ahead to achieve the deep and commonly accepted scenarios The progress is then measured towards decarbonisation that is required. The for the energy transition we have scenarios from National Grid Future Energy buildings energy sector poses a big identified targets for the future Scenarios (FES), the Department for challenge and requires significantly more state of the energy system and Business, Energy and Industrial effort to decarbonise. We have assessed the current state of the transition. Strategy (BEIS) and the Government’s the progress of decarbonising heating As the energy transition cannot Committee on Climate Change (CCC), with electrification and increasing energy be measured directly, we have which have the target year of 2030. efficiency in homes, concluding that the chosen to use a large number of current levels of activity will not yield the indicators to establish whether These findings are standardised in a necessary results. The transport sector has the transition is on track. barometer format, giving the visual a more diverse picture. Some of the chosen representation of the progress. Additional indicators show that the transport sector data was gathered to present the barometers is on track (e.g. number of EV chargers) in on a regional level for the 11 regions of some regions. However, regional differences Great Britain. This represents an important are most pronounced in the transport energy differentiation of the information when sector. The industrial sector is potentially the compared to previously published reports. hardest to decarbonise, as it is diverse in the application with the most energy-intensive The regional information adds another layer processes unable to transform because of analysis and allows the investigation of of either economic or technical reasons. the regional differences. Regions differ in However, economic growth in industry has their starting points in the energy transition, already decoupled from GHG emissions, as well as in their potential to transition the which is an encouraging sign for the future. power, transport, heating and industrial energy sectors and how they interact (sector coupling). We further combine this data with socio-economic information on each region, which allows us to analyse the implications for individuals and businesses.

69 7.1 Power 7.2 Transport 7.3 Buildings

The sector is on track to meet three The sector is on track to achieve Domestic buildings are a high out of six of its objectives and in three out of the seven targets emitting sector, mainly due to close pursuit of two more with examined for this research and the provision of heat. 83% of one target clearly missed so far. falling well behind on four. energy used domestically goes to space and water heating. In the future all electricity will have to come Transport is behind in reaching its GHG Economically and environmentally from clean sources, such as wind, solar emissions target and a long way off the final this is the area to focus upon. and nuclear, alongside the use of flexible target, meaning that large changes will be options for balancing (e.g. bioenergy and required to achieve the 2030 climate targets. Domestic energy efficiency in Britain gas with CCUS). The large cost reduction is lagging behind targets and non- in renewable energies sources (RES) makes Electric vehicle (EV) sales are ramping up domestic energy efficiency targets do it more likely that intermittent generators from a low base, but the current 0.4% not exist. Scotland benefits from higher will dominate the energy system. of the fleet will need to become 27% by proportions of high energy efficiency 2030 if climate targets are to be met. ratings whilst Wales has the poorest A shift in the location of generators will performing houses on average. change and therefore so will the areas At an aggregated, national level EV charger of economic activity in the electricity deployment appears to be on target to This can have a large effect on energy bills, supply sector. Generally speaking this deliver enough charging points for the especially with electric heating, which can favours more rural and coastal areas. projected EV uptake. However, there is have significantly higher costs than oil or regional and intraregional clustering of gas. Low energy efficiency is also linked to A multitude of different options, such as these charging points, which will result fuel poverty. However, this correlation is hard interconnection, storage and demand side in shortages and access problems in to see with the averaged out regional data. response will be available in the future other locations. The electricity network to allow the balancing of the system. implications of charging infrastructure Fuel poverty has been fairly even across also require significant investment. the Britain but is generally more prevalent The roll-out of smart meters is taking place in northern regions than southern ones, at a different speeds across the country, Hydrogen vehicles have not yet developed matching the trends in household income. but is clearly behind the target. This in Britain, with only one vehicle model prohibits the use of demand response from currently eligible for the Plug-In Grant. The Despite large deployment targets for 2030, domestic customers in the near future. lack of refuelling stations and their clustering the share of low-carbon heating (especially in London further hinders deployment. heat pumps) is still very low. A large scale Large cost reductions in key technologies up in the near future is therefore necessary. such as renewable generators, batteries and Early battery and hydrogen electric This will affect the cost of energy for each hydrogen suggest that it is possible that bus fleet penetration is on track region differently, depending on the housing costs for the consumers may not rise at all. despite overall bus fleet growth. composition and current heating source.

Renewables, particularly wind and solar Rail emissions have only decreased Extreme electrification could benefit farms, have led to job creation in less by 1% since 2010, jeopardising the energy spend in Scotland and the economically developed regions Britain. achievability of the 2030 target. Recently South-West, while increasing costs for Scotland shows that the increase in scrapped electrification plans are further midland and northern regions of England. renewable generation has created a hampering the transition of this industry. strong new industrial sector. The changing There are already high levels of generation mix is leading to shifting electrification in non-domestic buildings. employment patterns, with job losses in The South of England is the most fossil generation businesses offset by electrified part of GB in this subsector. gains in employment in renewables. The dispersed nature of renewables means that London and the South spend less on jobs are created in construction, operation energy relative to Gross Value Added and maintenance in more remote areas. (GVA)a, making companies in these regions less susceptible to changes in the energy system and its costs.

a Commercial and Public Gross Value Added.

70 7.4 Industry 7.5 Concluding remarks

Industry is a difficult sector to So, in this first assessment of Britain’s energy transition, there is much to be transform, as there are many positive about, but science fiction writer William Gibson’s observation that economic and technological barriers “the future is already here – it’s just not very evenly distributed” applies. and there are no robust targets for the industrial sector’s energy The rapid decarbonisation of electricity is a This work has drawn from diverse sources transition, beyond GHG reduction. feather in Britain’s cap, providing a means to provide a synthesised picture. Full to transform electricity-intensive sectors. comparability of data is hard, but the authors As a whole, British industry has Buildings and to some extent industry have sought to adjust for differences of decoupled its economic growth from are already benefiting, whilst transport is scope, time-scale and accuracy. Care has the emission of GHGs, currently placing potentially well-positioned. There are tough been taken to consider where Britain ‘ought’ it on track to reach climate targets. challenges ahead though, since areas such to be relative to the desired end points. as heavy industry, freight transport and Many representations of the underlying data Absolute electricity use in industry has some parts of heating do not immediately are possible and more has been left out stayed constant, while its share of total lend themselves to electrification, so than included. More can always be done energy has increased, as processes other options need to be considered. and the authors welcome the engagement have been electrified and efficiency The uneven distribution of change also of readers to inform the future of Energising increases have been implemented. applies regionally and socially. A looming Britain. We thank you for reading this far. concern is the effect of disparities in the The top 10 energy consuming industries energy transition, with some at risk of have varying degrees of electrification. being left behind economically due to At this point, many processes have been unaffordable changes. As in other walks optimised for cost. It is theoretically possible of life London stands apart, whilst less to increase electrification but this will affluent regions in the north and elsewhere increase energy costs significantly. This are falling behind on many measures. would make industry uncompetitive unless carbon pricing revenue is recouped.

North West, Midlands and South East are most at risk to losing jobs because of automation as these are the most industrialised areas in the country. Over 500,000 jobs are at risk in manufacturing, mining and quarrying, water and waste. This would obviously have a large effect on the energy demand of the industrial sector.

71 Appendices

Appendix 1: Modelling vehicle TCO

There are a large number total Table 8.1 8.1 and and Table Table 8.2 outline 8.2 outline the assumptions the assumptions used for each used vehicle for each type vehicle and type and cost of ownership (TCO) studies Great Britain Britain region, region, and andthe data the that data was that used was in the used TCO in equation the TCO presented equation above: presented that aim to compare the cost of above: conventional, internal combustion Petrol Diesel BEV PHEV engine vehicles against battery Nissan Leaf - Toyota Prius - electric (BEV) and plug-in electric Ford Fiesta - Ford Fiesta - Visia 40 kW Business hybrids (PHEV). However, few look Vehicle 1.1L Ti-VCT 1.5 TDCi 85PS single speed Edition Plus 70PS at if these TCOs differ regionally. automatic (no solar roof)

Price £13,715 £15,815 £27,290 £31,695 The total cost of ownership (TCO) of a petrol (Ford Fiesta), diesel (Ford Fiesta), Subsidies None None £4,500 £2,500 battery electric (Nissan Leaf) and plug- Depreciation 27.15 33.55 61.95 53.97 rate in electric hybrid vehicle (Toyota Prius) pence/mile pence/mile pence/mile pence/mile 18 30 miles/4.4 has been calculated using the following Fuel efficiency 41 MPG 55 MPG kWh/100km kWh; 59 MPG simplified equation. The representative vehicle was chosen based on the Annual maintenance 2.1 pence/mile 2.2 pence/mile 1.7 pence/mile 2.2 pence/mile popularity of the car, the relative size and Insurance the available information. The TCO of a group 2 8 21 21 hydrogen car was not completed due to Insurance cost £440/year £500/year £680/year £675/year insufficient data on fuel prices, potential £165 first year £145 first year maintenance and insurance costs, and Tax £0 £130 standard depreciation rates. This work assumed £140 standard £140 standard 5,6,7,8,c,d,e,f,g,h that each vehicle is owned for 3 years. Table 8.1: 8.1: Characteristics Characteristics of vehiclesof vehicles used us fored TCOfor TCO calculation. calculation. Data from Data 5,6,7,8,c,d,e,f,g,h from .

The Plug-In Grant subsidy has been included in this analysis. First year and Region Petrol Price Diesel Price Electricity km driven (£/L) (£/L) Price (£/kWh) per car standard tax rates have been included, (rounded which only apply to petrol, diesel and hybrid nearest unit) vehicles. Further, in London, the effects Scotland 1.286 1.318 0.148 14,878 on the congestion chargea have been Wales 1.286 1.315 0.151 14,864 applied to petrol and diesel vehiclesb. North East 1.28 1.313 0.143 14,004

c North West The annual fuel and maintenance costs Information for each car retrieved from1.282 Fleet News. Available at:1.315 https://www.fleetnews.co.uk/ 0.143 14,155 d and depreciate rate are all linked to InformationYorkshire for each car retrieved from1.279 Next Greencar. Available1.309 at: https://www.nextgreencar.com/ 0.139 13,978 e Information for each car retrieved from Fleet News. Available at: https://www.fleetnews.co.uk/ how intensely the vehicle is used, i.e. f InformationWest Midlands for each car retrieved from1.284 Parkers. Available at: https://www.parkers.co.uk/1.312 0.142 13,088 g how many kilometres driven. Based on UsedEast Money Midlands Supermarket and assumed1.288 a 30-year-old single male.1.316 0.139 14,329 h Information for each car retrieved from Next Greencar. Available at: https://www.nextgreencar.com/ data published by the Department for East 1.292 1.322 0.141 14,331 Transport1,2, it is possible to determine 136 London 1.292 1.321 0.145 Appendices 8,470 the average kilometres driven per vehicle South East 1.295 1.324 0.147 13,804 per year for each region in Great Britain. South West Average fuel costs, for diesel, petrol and 1.291 1.319 0.155 13,585 3,4,1 electricity, are not regionally homogenous, TableTable 8.2: 8.2: Kilometres Kilometres driven driven per vehicleper vehicle and pricesand pri forces petrol, for petrol, diesel anddiesel electricity and electricity by region. by3,4,1 region. and therefore further amplify the regional differences in the total costs of vehicle Appendix 2: Detailed analysis of vehicle TCO ownership3,4. These annual costs are further The total cost of ownership (TCO) has been calculated for a petrol, diesel, battery discounted based on owning the car for a TfL data on the number of congestion charges per year and DfT data on the number of cars in London suggest that private 3 years. The total depreciation rate electricvehicles make (BEV) around and 8 trips plug-in per year into electric the congestion hybrid charge (PHEV) zone, in whichprivately-owned case they would be vehiclecharged £11.50 This per was day. b furtherThe toxicity assessed charge is not to included determine in this analysis, the asregional the vehicles total chosen cost for this variations. research are not Generally subject to this speaking, charge, after 3 years is removed from the initial which in any case does not begin before 8th April 2019. cost of the vehicle to estimate the c petrol Information and for eachdiesel car retrievedcars are from currentlyFleet News. Available cheaper at: https://www.fleetnews.co.uk/ than BEVs and PHEVs, on a TCO basis. d BasedInformation on for each Table car retrieved 8.3, from the Next variation Greencar. Available in TCOs at: https://www.nextgreencar.com/ by vehicle type is not significant, potential resale value of the vehicle. e Information for each car retrieved from Fleet News. Available at: https://www.fleetnews.co.uk/ f suggestingInformation for eachBEVs car retrievedand PHEVs from Parkers. are Availablebecoming at: https://www.parkers.co.uk/ cost-competitive when a lifetime view is g taken.Used Money However, Supermarket the and initial assumed cost, a 30-year-old including single male.the Plug-In grant, of BEVs and PHEVs are h Information for each car retrieved from Next Greencar. Available at: https://www.nextgreencar.com/ up to twice the price of petrol and diesel cars. This significantly larger up-front cost 72 can negatively impact the uptake of plug-in vehicles, despite their lifetime cost being similar. This is especially true for households with lower gross household incomes, though the burden of a high initial cost could be slightly dampened if vehicles are financed.

Average Assumed initial cost (incl. TCO purchase price subsidy) Petrol £12,688 £13,715 Diesel £13,607 £15,815 BEV £14,502 £22,790

Energising Britain 137

Appendix 2: Detailed analysis of vehicle TCO

The total cost of ownership (TCO) has been calculated for a petrol, diesel, battery electric (BEV) and plug-in electric hybrid (PHEV) privately-owned vehicle. This was further assessed to determine the regional total cost variations. Generally speaking, petrol and diesel cars are currently cheaper than BEVs and PHEVs, on a TCO basis.

Based on Table 8.3, the variation in TCOs by vehicle type is not significant, suggesting BEVs and PHEVs are becoming cost- competitive when a lifetime view is taken. However, the initial cost, including the Plug-In grant, of BEVs and PHEVs are up to twice the price of petrol and diesel cars. This significantly larger up-front cost can negatively impact the uptake of plug-in vehicles, despite their lifetime cost being similar. This is especially true for households with lower gross household incomes, though the burden of a high initial cost could be slightly dampened if vehicles are financed.

Average Assumed initial TCO cost (incl. purchase price subsidy) Petrol £12,688 £13,715 Diesel £13,607 £15,815 BEV £14,502 £22,790 PHEV £16,333 £29,195

Table 8.3: Average TCO and assumed initial cost per vehicle type.

Based on the analysis conducted, nationally, petrol and diesel cars are still cheaper than BEVs and PHEVs. Figure 8.1 provides the regional breakdown of TCO values for each vehicle type assuming vehicles are sold after three years. London is the only region in GB where the TCO for BEVs is lower than conventionally fuelled vehicles. This is a result of lower distances travelled by vehicles compared to any other region, which in turn affects fuel requirements, maintenance costs and depreciation costs. Further, London has a congestion charge zone, which if travelled into every working day could increase the annual cost of petrol Figure 8.1: Total cost of ownership by vehicle type by region. i and diesel vehicles by up to £3,000 . i For this research it was assumed that vehicles entered the zone eight times per year.

73 Appendix 3: Modelling cost of heating electrification

To calculate the change in energy spend as The current status of heating in Britain a band from West to East in mid-Scotland, heating technologies change, the important can be approximated with the information which includes the two main cities Glasgow assumptions for these calculations are: whether a household is on or off the gas- and Edinburgh. In comparison, there are grid (see Figure 8.2). It is assumed that large off-gas grid areas such as the South • For cost data: if a house is connected to the gas-grid West of England, the Highlands of Scotland - Commercial pricing assumed to then they do use gas for heating, as this and mid-Wales that have relatively low be indicative for domestic due is the currently cheapest option22. Off-gas electrification of heating. Here, other off- to using relative differences. grid homes commonly use either electric, gas grid energy sources would be utilised. - Carbon price in line with what is biomass, LPG or oil central heating systems. The off-grid areas without electricity are needed to reach CCC targets The share of electric heating in off-gas often in rural areas, with space for storage - Cost of capital of 7.5% grid homes can be seen in Figure 8.3. of the fuel for other heating options. - No income from DSR or other sources that could reduce costs The areas with the most electric heating in off-gas grid houses show that they are • All on-grid houses change to new focussed around pockets in England and in low-carbon technology (GSHP, ASHP, conventional electric or biomass boilers).

• Only off-gas grid houses that are not already electric or biomass change to new low-carbon technology.

• Current solid fuel central heating is considered solely biomass, as it is assumed that any remaining coal central heating would be converted to biomass.

• The data for central heating types is taken from 2011 Census data and will likely have inaccuracies to today’s energy split.

• The calculations for each technology assume that if the household is allowed to change (as described above) then it will change to the one new lowcarbon technology selected. E.g all on-gas Table 8.2: Share of households off-gas grid by region and local authority.12, j grid and allowed off-gas grid would become ASHP (if ASHP selected).

• Total spend is calculated by: - (Original spend * Off grid technology price factor * % of total homes that are off-grid and available to change) + (Original spend * Off grid technology price factor * % of total homes that are on-grid) - The difference between the new spend value and the original spend is then calculated.

Figure 8.3: Share of electric heating in off-gas grid homes by regional and local authority.k j Scotland data obtained from: Non-gas map https://www.nongasmap.org.uk/ k Uses data calculated from Figure 4.6 and Figure 8.2

74 Appendix References

1 Department for Transport (2017): Table TRA0206: Road traffic (vehicle kilometres): by vehicle type and region and country in Great Britain, annual, 2017. www.gov.uk/government/ organisations/department-for-transport/series/road-trafficstatistics

2 Department for Transport (2017): Table TSGB0906 (VEH0204): Licensed cars, by region, Great Britain: from 1994; also United Kingdom: from 2014. https://www.gov.uk/government/ collections/vehicles-statistics

3 AA (2018): August 2018 fuel prices: UK and overseas petrol and diesel prices – August 2018. http://www.theaa.com/driving- advice/driving-costs/fuel-prices

4 Department for Business, Energy and Industrial Strategy (2018): Average unit costs and fixed costs for electricity for UK regions (QEP 2.2.4). https://www.gov.uk/government/statistical-datasets/annual-domestic-energy-pricestatistics

5 Ford (2018): Ford Fiesta – Customer Ordering Guide and Price List. https://www.ford.co.uk/content/dam/guxeu/uk/documents/ price-list/cars/PLAll_New_Fiesta.pdf

6 Nissan (2018): Nissan Leaf Brochure. https://www-europe. nissancdn.net/content/dam/Nissan/gb/brochures/Vehicles/ Nissan_Leaf_UK.pdf

7 Toyota (2018): Price List – Effective from 2nd July 2018. https://www.toyota.co.uk/download/cms/gben/July%20 2018%20Price%20List_tcm-3060-602975.pdf

8 UK Government (n.d.): Low-emission vehicles eligible for a plug-in grant. https://www.gov.uk/plug-in-car-van-grants