Comment: Why we don’t need to ‘think big’ about energy

Energy has always been a pretty macho area of policy. With exceptions, it’s a field dominated by boys with their very big and very expensive toys. The same goes for the politics of “infrastructure” in general, so when the two combine the results are usually big power plants and cables. But things may be changing.

The National Infrastructure Commission’s consultation document suggests Osborne’s new advisory body is looking at the distinctly unfashionable issue of how to balance supply and demand when it comes to our power, rather than just keep expanding supply.  

And it’s right to do so. In the winter months especially the amount of power we need varies each day by up to 50% (see below).

Right now that means bill-payers are charged for a lot of power stations to sit around doing not very much waiting until they all come home and turn on the kettle.

But if the government is serious about tackling climate change, it could get more complex still.

Rise of variable generation

One option to clean the nation’s power supply is to replace like for like. Switch massive coal plants for massive nuclear plants, or attach carbon capture technology to gas and coal fuelled facilities.

There are two problems here.

One is that both of these options are very capital intensive, which means they need to run all the time to be economically worthwhile. But we don’t use power all the time, so bill-payers would still need to stump up for a raft of gas power stations which, when they run, would still emit carbon dioxide.

The other, more fundamental, issue is that neither the nuclear nor carbon capture plans seem to be going terribly well.

Which means that the UK could become increasingly reliant on smaller scale and distributed wind power (and a bit of solar) to fill the gap left by our phaseout of the most polluting fossil fuels. And like power demand, wind is variable.

Cables or algorithms

Whilst new wind turbines or gas plants are encouraged there is little effort made to support the things which might ensure that power and demand are evenly matched. That’s where the commission comes in.

Yet if the big power plants don’t work, the temptation, again, is to reach for the big kit.

The commission gives substantial space in its consultation to giant international interconnectors, key as they are to ensuring power is not wasted across the continent, and so minimising the amount each country needs to spend on new wind farms or power stations. It also makes a nod towards utility scale battery farms.

And power cables and battery farms are the sort of thing that comes to mind when one says the word “infrastructure”. Less so “demand side management”, which depends more on new smart meters and algorithms than concrete and steel.

Less is more?

That’s basically using smart meters to encourage people and companies – or more accurately their smart fridges and appliances – to use power when it’s plentiful and cheap and power-down when the wind is still and the price of power has gone up.  

It means you need fewer wind turbines and power stations – not normally what you associate with infrastructure spending. But doing more with less could go further than that.

Power doesn’t have to be stored in big battery farms – that’s a bit of a literal solution to the problem of variable supply and demand. Instead it can be converted into hydrogen or household gas and put into the grid where there is already ample storage or stored as heat avoiding the need for giant battery farms.

And when a lack of wind means we do use gas to produce power it can also provide heat to buildings or industry, reducing the additional fuel demand from local homes or businesses.

Cost saving

The upshot of this way of thinking is that it allows high levels of variable power generation – and saves significant amounts of money.

A study commissioned by Greenpeace found that using batteries, interconnectors and demand side management the UK could generate 85% of its electricity from renewable energy by 2030 – whilst heating and transport were also electrified.

There are multiple ways to crack this egg.

In the US, a Stanford University study found that a system powered entirely by wind, water and solar power could work with high levels of hydrogen production and the storage of energy in heat. A separate study by the Rocky Mountain Institute found that demand side management and wider levels of interconnection were more important than storage.

The point of these ideas is, of course, to save money.

A detailed study for the European power system by McKinsey, KEMA and Imperial College showed that by 2030 interconnection and demand side response “shifting up to 10% of daily load in response to availability of supply, decreases the need for grid capacity by 10% and back-up capacity by 35% and thus helps in managing the risk of insufficient grid transmission. Demand response also reduces the volatility of power prices by better matching demand to available supply, reducing volatility by 10–30%”.


The problem with studies though is that they model the future based on today’s technology and ideas.

When it comes to energy, that’s as risky as committing to build a giant power plant 10 years from now, because by then the world’s biggest private bank, UBS, says big centralised power plant could be redundant.

In Germany and elsewhere firms are working on the technology to convert electricity to gas both at a utility scale and, potentially, at a scale which could work for individual buildings. If it works the technology could make Tesla’s powerwall look like the horse and cart.

Other firms are looking at technology that could control voltage, which – if applied across the UK – could reduce demand at peak times by the equivalent of four back-up gas plants.

And innovation is not simply about technology development. New tariff structures that encourage energy use when the sun is shining or the wind is blowing will be key to ensuring demand follows supply – else the algorithms and their human masters have nothing to go by.

All of which isn’t to say we won’t still need big power plants, or large-scale offshore wind farms, but the future of energy isn’t really about the next big thing.

As the 1980s desktop made way for cloud based computing and the mobile phone, so the future of our energy supply may have more to do with algorithms and the imaginative use of existing resources than new concrete and steel.