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Minister - Read my lips

Posted by on in Heat 2014
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So last week our wait was over and we were able to meet old friends and enjoy the Heat Conference 2013 jointly held by the Combined Heat and Power Association and the Energy Institute.  This was the second year it had been held and I'm sure it'll become a firm fixture. There was a marked focus on the customer to the extent that previously familiar diagrams were turned upside-down or back-to-front or even inside-out to ensure the customer was at the start of our thinking process. As they should always be, of course.

The first session was chaired by the former SSE Chief Executive Ian Marchant and we kicked off with the Chief Executive of the Committee for Climate Change David Kennedy’s and his adroit overview of where we are.  To summarise it's not getting better, although he managed to add a positive spin. 

He was swiftly followed by Louise Strong from Which? who pounded us with a “customer reality check”. If we didn’t know who was the most important person at the start of her presentation, we had no doubt by the end.  Amongst the excellent points made she emphasised that presently customers connected to heat networks are afforded no protection from Ofgem or even the Energy Ombudsman.  I didn’t know that.  Part of her reality check was the results of a consumer survey on trust.  Possibly there was no surprise that at the top of the “Don’t trust” table were the energy companies not so closely followed by the car salesmen.  That’s right car salesmen!  And after five years of being the master villains, banks and financial services now seem to have completed their penance and transformed their relationship with consumers to be verging on warm and cuddly relative to the energy sector.  So when it comes to heat, if you think customers will welcome an organisation they don’t trust, to sell them something they don’t know about and can’t do without then probably you’ve got another think coming.

With most of us suitably chastened the mood of the conference was then lifted by Rt Hon Gregory Barker MP, Minister for Energy and Climate Change who gave an accomplished presentation of the Government’s achievements on Heat.  Yes, it has moved up the agenda.  Yes, there is still much more to do. But the question everyone wanted to know the answer to was what was he going to do about £139m tax hit on  CHP plant.  For reasons I won’t go into but more information is here, CHP plant used to receive a small incentive to reflect its low carbon credentials.  That disappeared a couple of years ago and then with the introduction of the Carbon Price Floor it now finds itself worse off than equivalent electricity only plant which has a much lower efficiency.  This double whammy is having a serious impact on existing CHP plant and future plant is being shelved left, right and centre.  So what was he going to be doing about it?  Well, no answer was forthcoming but the Minister coyly hinted that there might be something in the Autumn statement. 

There then followed a series of questions from audience, one of which the Minister openly stated he didn’t know the answer to. He then asked the audience to be a patient whilst he read the lips of one of his advisers. Well that was honest I thought.

During his presentation the Minister had emphasised the need to take an integrated approach to energy as well as expounding the virtues of Electricity Market Reform.  I couldn’t let him get away with that and so I held up my hand.  Unfortunately the smell of coffee and croissants wafting down the aisle and had an overpowering effect on most of the audience and Ian Marchant sensing the mood, ended the session and my opportunity to ask a question. 

So what was my question? Well if he so strongly supported an integrated approach to energy why is there no reference to heat in the Draft Energy Bill?  In fact, other than the movement of nuclear fuel, transport is not referred to either.  I am sure he would have had a good answer or, if not, he would have read the lips of someone who did.

We then moved into the remaining sessions, all of which were very good but I am just going to focus on three. The first of these was from Alasdair Young from Buro Happold looking at the role for heat networks with a particular focus on London.  The potential is large and there’s a mass of documentation covering studies which are available here.  These include wasted ( I always add the “d”) heat from range of sources including sewers, metro tunnels (London Underground), electricity infrastructure, commercial buildings and so on.  The estimate is that about 75% of London’s heat needs could be met by wasted heat.  That’s about 50 TWh and, on the assumption it displaces gas, about 10 Mt of CO2. Not to be sneezed at I’m sure you’ll agree.

The second presentation was by Marcus Stewart from National Grid. He presented the results of their Future Energy Scenarios (available here) but with the focus on how the UK is to meet the heat challenge.  The process used by National Grid in constructing the scenarios is impressive and involves wide scale consultation and engagement via a number of workshops held across the country. I think most would agree that National Grid has gone out of its way to be inclusive in the development of its scenarios.  But I couldn’t agree with their conclusions on heat as they saw almost no role for district heat networks.  According to National Grid in 2050 heat is delivered predominantly my heat pumps supplemented by some gas and bio energy. But no district heat networks. I need to get to the bottom of this and was pleased that Marcus was happy to discuss their analysis in more detail and so hopefully my questions will be answered soon.

The final session I want to touch on was a presentation from Stewart Reid of SSE on the Northern Isles New Energy Solutions (NINES) project. There’s some information here but in brief, Shetland has no electricity connection with the mainline, has no gas, plenty of wind and relies on an ageing oil fired power station which needs to close.  But they’re not just going to replace it with another.  Instead they are looking at arrange of solutions which include demand side management with “Smart” storage and water heating, extension of the existing district heating system as well as the installation of the largest battery in Great Britain.  Underpinning all of this will be active network management.  I think there could be a lot the mainland could learn from this fascinating project and I will certainly continue to follow it closely.

In the interests of political balance, the conference closed with a key note speech from Jonathan Reynolds MP, Shadow Minister for Climate Change. Recently appointed, I thought he did rather well covering Labour’s approach to heat, energy efficiency as well as displaying faux concern that Greg Barker looked a little bleary eyed.  Was this to do with his statement that he wouldn’t be sleeping if he didn’t have 10,000 signed up to the Green Deal at the end of the year? He probably won’t be sleeping much next year either.  

He spoke about Labour’s price freeze and then spoke briefly about the reforms Labour would make to the energy market, including going back to the Electricity Pool.  I was a little gob smacked by this.  So all the arguments used by the Labour Government back in the late 1990’s to go from the Pool to Neta have been turned on their head to justify going back to the Pool. Perhaps he doesn’t know that it cost about £600 million and took 5 years (see here).  In my opinion it was a waste of time and money then and it would be waste of time and money now.  The one theme that kept being repeated throughout the conference was the need for policy stability.  Read my lips, Shadow Minister, don’t do it.

Conference presentations are available here  and if you have any comments you can Tweet me @rcsansom.  

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