Two thirds of our current electricity generating plants will be decommissioned by 2030. In the next fifteen years, they will need to be replaced with a mixture of new power stations and by generating more energy from renewable resources – primarily wind and solar, and tidal might also have a place. On top of that, we will need more electricity as we proceed with the electrification of heating and transport – some predictions suggest that we should eventually be planning for a seven-fold increase in electricity generation capacity.
A guru of infrastructure projects, Sir John Armtit, recognises these figures. He points out that a re-configuration of our electricity grid which transports electricity from where it is generated to where it is used will also be needed. We will need to look at local grids too, when we are using excess power generated by our neighbours from their solar panels which they don’t need, and vice versa. The present grid arrangements are paid for by surcharges on customer bills (currently around 25% of a domestic electricity bill), and new investment in this area will increase our bills. The new Secretary of State at the Department for Business, Energy and Industrial Strategy, Greg Clark, also knows all about this: he wrote papers about it for the Conservative Opposition before the 2010 General Election.
With these new costs for generating and distributing electricity on the radar, there is bound to be upward pressure on prices. Some savings might accrue, if we end up importing less oil and gas to burn to generate electricity, but we need to look at how we use electricity in our own homes too. If we all want to use electricity at the same time between 6pm and 10pm to watch television, cook meals and recharge our electric car battery, we will need to build huge extra generating capacity which we won’t need between 2am and 6am. In the language of the energy strategists, this is known as demand management. So how do we rebalance our electricity demand to smooth out the peaks and troughs?
One step on that journey is smart meters, which will be installed in every home by 2020, and which tell us in simple terms how much energy we are using and what it is costing us (on our current tariff) in real time. Simply having this knowledge might prompt more people to rationalise their use of energy, and to switch tariffs. Reporting on the competitiveness of the energy market and how it works for consumers, the Competition and Markets Authority reported last month that more choice of tariffs was the way forward for the industry. But switching remains an issue for people without good broadband access or with poor computer skills, and the confidence, to find the best deal for themselves.
Another step is coming from manufacturers making electrical appliances. So when you accept delivery of a new freezer, you may be invited to programme it to only switch on to ‘boost’ if its temperature internally rises above a certain temperature, or when the electricity on your current tariff is cheapest. Your electric car recharger menu will offer a similar range of options. What all of this adds up to is putting new onus on the consumer to pay attention to details to which, in the past, we have not given a thought.
The price of energy seems destined to rise. But at the same time the tools for householders to manage and control their energy usage are getting more sophisticated. The old world was energy at a flat price which you plugged into and used as you wished. That will not be the new world. Pilot projects run by Age UK have shown that there is a demand for a new information and advice service in this area, but it is difficult to design and fund one which meets the needs of all enquirers. Try our new energy tool on this issue, and give us your advice on the way forward.