Ensuring the development of low-carbon generation and the regulation of greenhouse gas production is one of the many priorities for UK government. As such, several policies have been introduced to help manage greenhouse gas levels, including the Energy Savings Opportunity Scheme (ESOS) and the Smart Grid Forum.
The Energy Savings Opportunity Scheme (ESOS)
ESOS is a mandatory energy assessment and energy savings identification scheme for large companies and corporate groups.
In order to comply with ESOS, qualifying companies have to submit data on their annual energy usage, identifying significant areas of energy consumption. They are also required to appoint a qualified and approved ESOS Lead Assessor to oversee their energy audits and ESOS assessments.
These organisations also have to notify the scheme administrator and maintain records of their compliance to be reassessed every four years. This allows the government to keep a close eye on energy consumption from large undertakings as well as delivering advice on how to reduce their energy consumption in the short and long term.
The Smart Grid Forum
The Smart Grid Forum was established by the government to assist in the UK’s transition to low-carbon generation. Its aim is to identify future challenges for electricity networks and system balancing, But it also acts as a guide for the actions that the Department for Business, Energy and Industrial Strategy (BEIS) are taking to address future challenges, remove barriers and aid efficient deployment.
In short, it is hoped that this forum will smooth out the transition to renewable energy by addressing concerns about energy security and prices. Ensuring that carbon emissions are lowered without jeopardising the current energy market is central to this forum’s aim.
By accurately managing carbon emissions levels and supporting the market throughout the transition, it is hoped that the UK will hit its ambitious carbon targets more easily.
Low Carbon Generation
Official figures published in 2016 show low carbon power, which has been supported by the government to meet climate change targets, accounted for 50% of electricity generation in the UK in the third quarter, up from 45.3% the year before.
The rise was largely driven by new wind farms and solar farms being connected to the grid, and several major coal power stations closing.
Transitioning to these types of low-carbon generation, without neglecting supply, is the main challenge that the energy industry faces and is trying to tackle through policies such as the Electricity Market Reform (EMR).
EMR is a package of government policies designed to advance investment in low-carbon electricity, improve the security of our electricity supply and lower costs for consumers.
There are four policy components to EMR that were introduced in The Energy Act 2013:
- Contracts for Difference (CfD): provides long-term price maintenance to low carbon generation, allowing lower cost investment and therefore lower costs to consumers.
- Capacity Market (CM): provides a regular payment to dependable forms of capacity (both demand and supply side), in return for capacity being available when demand is high.
- Emission Performance Standard: an annual limit on carbon emissions from new fossil fuel plant.
- Carbon Floor Price: taxes solid fuels, gas and LPG used in electricity generation under climate change levy (CCL) and fuel duty.
The EMR encourages all businesses to review how they utilise electricity and to look at ways they might generate it themselves through renewable resources. EMR also offers an attractive incentive for major organisations to reduce their demand for electricity at times of peak capacity and over the long term. Organisations that generate their own electricity can get paid to export excess to the grid as well as for reducing their demand during peak times.
Significant progress has been made in transitioning to renewable and nuclear energy. Around two-fifths of the UK’s energy generation now comes from either nuclear or renewable energy sources. It is hoped that policies such as EMR will increase the uptake of renewable energy generation.
The government also has plans to build a ‘new generation’ of nuclear reactors while decommissioning the 16 currently operating in the UK by 2025. This investment in renewable and nuclear technologies will not only make the UK’s energy production greener but more efficient as infrastructure is upgraded.
A report by the Energy Technologies Institute also cited the potential for the UK to take advantage of energy technologies such as bioenergy and carbon capture and storage.
It says: “Biomass combined with Carbon Capture and Storage (CCS) remains the only credible route to deliver negative emissions, necessary to meet the UK’s 2050 GHG emission reduction targets. Without targeted intervention and leadership, the opportunities to realise the full benefits of this negative emission potential could be missed.”
If these technologies are fully utilised, it is estimated that bills will be stabilised and reduced by around 4% within the next two decades. Moreover, the transition towards renewable energies will create a greater range of energy sources, lowering carbon production and securing UK energy in the event of a reduced fossil fuel supplies.
Achieving carbon reduction
If the UK is to meet its ambitious climate change targets, it is clear that a raft of measures must be introduced. Improving energy efficiency and reducing energy demand is perhaps the easiest place to start. As such, ESOS provides a major opportunity for organisations to act on the energy saving opportunities identified to make energy savings of as much as 20%. This could make a big contribution to carbon reduction targets.
Michael Dent is Managing Director of Inprova Energy, one of the UK’s top ten business energy procurement and energy management consultancies.Inprova Energy is an independent energy consultancy – specialising in business energy purchasing and analysis, energy auditing and management, carbon reduction and reporting, and legislative compliance.