49: The future of smarter, more local energy systems - Local Zero live from EnergyREV's 2022 summit
Recorded at EnergyREV's central London summit on smart local energy, the team explore what a smarter, more local energy system might look like, and how it could drive the push to net zero and tackle the energy crisis. Matt and Becky are joined by EnergyREV's Rob Saunders, Teodora Kaneva from Tech UK, UK100's Karen Barrass, and Professor Jeff Hardy, Senior Research Fellow in Climate Change and the Environment at Imperial College London's Grantham Institute.
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Episode Transcript
[Music flourish and applause]
Rebecca: [Laughter] Well, hello and welcome to Local Zero with Becky and Matt and for this very special edition of the show, we are live in Central London with a brilliant panel of guests who we’ll introduce shortly and, of course, our live studio audience.
[Applause]
Actually, Matt, I think that this might be the first time that we’ve been physically together since we got drunk for that Christmas episode at Fraser’s house.
Matt: Yeah, and we haven’t been invited back to Fraser’s since sadly. I think it’s the first Local Zero live we’ve done since COP26 and, in fact, that was the last time... I think I saw Professor Bell there who gave us some very helpful, critical feedback, so I’m hoping we’ve brought that into the show today. I’m really happy to be here in person and doing this. Thrilled to have you all here.
[Music flourish]
There will be no surprise to those of you who have been at the conference for the whole of today so far – smart local energy systems but what we want to talk about today is the future of smart local energy systems, in particular, what do these look like, what kind of vision of the future can we present and what should we be angling for with a focus on delivering net zero, reducing energy costs but also a big focus on supporting energy justice. We’re speaking from the conference today, for listeners who pick this up on the feed, and much of what came up today was about inclusivity, access for those who are least able to afford and with where energy bills are going and where they’ve been which has never been more important. We’re wanting to understand what the vision might look like in the future for smart local energy systems and how we can deliver those. We are joined by an esteemed panel here today who I hope have the answers.
Rebecca: [Laughter] But before we bring them in, just a quick reminder to find us and follow us on Twitter. We are @LocalZeroPod. Get involved in the very interesting discussions over there and if like me, you can’t constrain your thoughts to 280 characters, you can always email us at LocalZeroPod@gmail.com. Also, if anybody in the room or anybody listening online hasn’t subscribed to the pod, well shame on you. Do that and that way the episodes will automatically come into your box as soon as they are released. Now, I think we should bring in our guests, don’t you, Matt?
Matt: Absolutely.
Rebecca: So please, in turn, you’ve each got two minutes to share your thoughts on what smart local energy systems mean to you and why are they important in delivering a net zero transition. Rob, I’m going to start with you.
Rob: Hi, everyone. I’m Rob Saunders. I work for UK Research and Innovation and I run a big programme called Prospering from the Energy Revolution. As a result of that and because that programme is all about trying to understand the potential of smart local energy systems, I’m probably one of the only people who’s spent pretty much every working day over the last four years thinking about smart local energy systems. So they mean quite a lot to me, to be honest [laughter]. Through that journey, and it has been a journey, to be honest, I’ve come to conclude that smart local energy systems are the difference between a net zero transition that really is super beneficial for people right across the country and a very slow and grey transition to net zero that’s going to cost everybody and be quite difficult for all concerned. I think it honestly is that big a thing that we can really change the way that we can transition but also create a whole world of better outcomes by getting smart local energy systems right. So I hope we can unpack a bit of that over the next hour or so, Becky.
Rebecca: I’m sure we can. Karen, I’m going to pass to you next.
Karen: Thanks, Becky. I’m Karen Barrass. I’m the Policy and Research Manager at UK100. For listeners who might not be aware of what UK100 is, we are a network of the UK’s, I think, 103 (on the last count) most ambitious local authorities who have committed to delivering net zero ahead of the government’s target. They’ve put in place climate emergency targets of reaching net zero for their council emissions by 2030 and for their broader community emissions by 2045 or sooner if possible. So for us, our kind of bread and butter is unpacking how that can be done and I think that, obviously, smart local energy systems play a significant role in that. My background is very much in governance and understanding how the bits and pieces fit together. At UK100, I spend a lot of time thinking about the role that local authorities can play as conveners of place to ensure that we have a future that works for local communities because what is going to be the answer to delivering net zero in a just and timely way in Cornwall is going to be very different to that experience in York. So we work with both rural and urban authorities of different scales trying to unpack what that means and how we get there. I think that smart local energy systems have the potential to link energy with transport and with all of the things across our communities that need to be decarbonised. So for me, it’s about understanding how we do that and I’m really excited about the conversation today. Thank you.
Rebecca: Thanks. Teo?
Teo: Thank you, Becky. My name is Teodora Kaneva and I’m Head of Infrastructure at techUK which is the trade association representing the digital tech sector. What that means really is that we work with some of the large FTSE 100 companies, for example, the likes of Google, Microsoft, Meta, IBM, etcetera, but over 600 of our members are SMEs. Specifically, on infrastructure, we work to represent those companies in a digital-led transformation within the energy, water and mobility in city spaces. For us, smart local energy systems are also quite important. If we need to deliver net zero specifically, we think that all scenarios or at least most of the scenarios include flexibility, intelligent infrastructure management and cross-vector collaboration between different sectors because we all know that energy demand will increase dramatically and we all now know that demand will be a lot more complex to analyse and to predict and it will become a multi-dimensional tool. So if we don’t change the way that we think about energy, it’s no longer matching supply with demand because demand will be extremely complex in that regard. When we think about decentralisation paired with decarbonisation, that adds extra complexities. So if we cannot manage to take advantage of locally-sourced energy, locally-saved energy or locally-stored energy, I don’t think we would ever get to net zero in my opinion.
Rebecca: And Jeff?
Jeff: Hi, everyone. My name is Dr Jeff Hardy. I’m a Senior Research Fellow at the Grantham Institute at Imperial College London and I’m part of the EnergyREV family. I look after our work on governance of smart local energy systems; so how you create the right conditions so that these smart local energy systems are enabled and they’re allowed to do what they want to do. When we talk about what a smart local energy system is and how we’re going to enable them, it’s like we’re saying there’s a choice in whether we’re going to have them at all and it’s just not true. If you look at all the statistics, energy is going to become more local no matter what we do. There are some great statistics from BloombergNEF (Bloomberg New Energy Finance) that basically show that energy systems are going to become more decentralised. Australia is the one that’s going to be the most decentralised energy system in the world with nearly 50% of energy being decentralised.
[Applause]
Energy is going to get more local no matter what. So the other bit is that the local context is really important because it means that there is potentially some choice in what local energy system we have. That means thinking about what local resources there are and what skills are available, as we heard from in the conference earlier, but also a choice of the local population about what energy system they actually want. The smart bit, to my mind, is how it all comes together because that’s all about delivering local outcomes. What it could mean is generally it enables optimisation and the question is what are you optimising? You might be optimising to maximise the utility of your local generation. You might be optimising to minimise the price but you might be optimising to distribute the benefits in the fairest way locally because you know who will stand to benefit most or should benefit most. So there’s loads of stuff in here but it’s not really a debate about whether we’re going to have smart local energy systems. It’s what we think they should be in the future.
[Music flourish]
Rebecca: Fantastic. Well, welcome to our wonderful panellists.
[Applause and cheering]
Great to see you all in the flesh, so to speak, and hear what you’ve got to say. I’d like to start with a question for all of you really. Thinking about what you’ve all just talked about, some of it is about the local context and how we can do stuff that’s right in one place and not in the other and the smart piece which, honestly, I still struggle to get my head around sometimes. I don’t know but sometimes when I step back and I’m looking at our Local Zero banner with the wind farms and electric vehicles and I know we often talk about other technologies in the home and sometimes I just think, ‘God, I feel like I’m living in a Jetsons’ future,’ [laughter] for those of you old enough to remember The Jetsons [laughter]. I don’t disagree that this is something that is on our plate and at the same time, we’re hearing more and more about these immediate challenges that we’re going to be facing this winter and the energy crisis with rocketing bills and the cost of living. So how do we reconcile these two things? So this very exciting and sexy vision of what we can do and these amazing local outcomes that we can deliver with the fact that a lot of people simply aren’t going to be able to turn on their heating this winter. Are smart local energy systems a luxury that we shouldn’t be dealing with right now or are they something that is fundamental to addressing this energy crisis? Rob, you’re nodding along. I’m going to push that to you first.
Rob: I must avoid nodding in future [laughter]. Look, this is about the short, medium and long term I think, isn’t it? We have to keep our eyes on all of those. Clearly, there’s a huge crisis in the cost of living and in energy costs at the moment which has to be dealt with but we can’t take our eyes off the medium term and delivering the right things for the energy system and most importantly, for the people who pay for that energy system, me and you, in our homes and our businesses. That has to be a real focus over the next ten years and getting on the right track to delivering that in the best way so that we have the best outcomes for everybody. I don’t think they’re at all incompatible actually. A lot of our projects are showing how this local optimisation and the bringing together of supply and demand with intelligence in the system can save costs from savings in infrastructure or by enabling people to take part in market inflexibility and that can help them to minimise their exposure to when energy costs are high in the future. So I don’t see it as one or the other; I think they’re entirely compatible.
Rebecca: Karen, we’ve been talking a lot about the local dimension of this. I mean local authorities are at the coalface of a lot of this... or the wind face, I don’t know [laughter]. In fact, Matt, was it our first ever episode that we had Polly Billington on?
Matt: Certainly one of the first.
Rebecca: Yeah, one of the first ever episodes talking about COVID and that was the crisis at the time and how these things get reconciled. How are local authorities going to cope with this dual challenge that they’re facing?
Karen: First of all, I’d like to say thank you for The Jetsons analogy because I love The Jetsons. I really appreciate it [laughter] but I think COVID has actually given us the experience that demonstrated how much of a powerful role local authorities played in terms of the vaccine rollout, supporting small and medium enterprises during it and handing out the relief for those businesses. They’ve really demonstrated their value and I think that that’s hugely important when we think about tackling both the impending short-term crisis and the delivery of the long-term future because I think that whilst it may look like a very futuristic image, it’s not the technology now that is the barrier to that. We’ve got some fantastically successful pilots that we can learn from and I think that what’s standing in the way is really the regulatory and policy barriers and the lack of a framework nationally to help move these things forward. So I think that local authorities are very clear in what they can deliver and are working very hard within the constraints of the current system but I think that the thing that’s going to enable that longer term and start to push from these small-scale things to a more rolled out, seamless future will be getting the rules changed in the way that we need them to be.
Member of audience: Yeah, absolutely.
[Applause]
Rebecca: Jeff, you look like you’re chomping at the bit to come in on that one.
Jeff: Well, we were talking about regulation [laughter]. As a recovering regulator, I always feel like it’s just a trigger [laughter]. If we think about what we heard today in the package that came out on the energy crisis, I think many of us remain somewhat bashing our heads against the wall on the lack of energy efficiency being front and centre. I know I don’t need to talk to this audience about it but I don’t quite understand why it’s such a problem. In terms of the broader picture, as I’ve said already, we are going to have more local energy in the future. It’s inevitable. We’re going to have all of these batteries on wheels as electric vehicles. We’re going to have all of these new heating technologies in homes with local generation, the payback period for solar on homes, at the moment, and what energy prices would have been was two to four years, for example, subsidy-free which is just an example about how things change so rapidly with prices. What we still lack in this country is any sort of vision for a zero-carbon energy future. That doesn’t have to be complicated. We’ve had climate assemblies and we’ve had all sorts of things that have told us what people want and expect in that future and it’s not that complicated; environmentally compatible, just and some people say better than what we’ve got. I love that one. Those things are really important. The thing that we miss is government standing behind their side of the social contract and saying, ‘Yeah, we’ll deliver that for you,’ but then getting out of the way of those who are going to actually deliver it. We heard earlier today, at the EnergyREV conference, that basically we have the most centralised funding approach of just about any country in the world. The people who are going to deliver are inherently local for much of this and what we need is vision from government, a release of powers, resources and the ability to pick up capabilities in local places, local authorities and local communities and the power to go on and just do it in the vision of the people of that place but with some coordination across the whole piece. That’s really important as well.
Rebecca: How does all this tie in with the tech that’s actually got to sit behind all of it?
Teo: From a tech perspective, the technology industry in the UK, for us, is a huge success story and the UK has got so much expertise in engineering and talent but of course, without ignoring the fact that we still need a lot of digital skills. From our perspective, the rules have changed, for example, demand-side response services or flexibility. We’re trying to adapt to an old legacy system in terms of also the way we think about energy in general. We have to understand that the rules have changed and we have to think about the future and the future is a lot more agile and a lot more flexible. We have to think about emerging technologies as well that will be helping the consumer to save money. It will be helping the DNOs (Distribution Network Operators) to despatch the right energy at the right times and it will help the system to be a lot more efficient and a lot more low-cost in general. So from a tech perspective, I also have a bunch of numbers that I’ve compiled which maybe I can reference a little bit.
Rebecca: We love numbers on Local Zero [laughter].
Teo: We just have to change our mentality and culture in government as well which is extremely important and the way that we think of our renewable energy and the way we think about investment in low-carbon assets. My vision is that we should be a lot more ambitious than we are at the moment in terms of government and regulation. We often get a lot of pushback, as the tech industry, from BEIS (Department for Business, Energy & Industrial Strategy) and OFGEM (Office of Gas & Electricity Markets) who say, ‘We are designing a regulation and it’s your job, as the tech industry, to come and play on the markets,’ but in reality, it really isn’t [laughter].
Matt: So on that point about ambition... and I should say that I don’t do this in my spare time. In my day job as an academic preparing for teaching, I’ve spent a lot of time going through past White Papers and UK industrial strategy. That’s why I’m drinking a beer now to numb the pain...
Rebecca: You don’t do this in your spare time? I’ve never heard a bigger lie [laughter].
Matt: ...of the last few weeks but what came through a lot of that is that, and obviously, we’ve had a big change of Cabinet and we’ve got a new PM in the last few days, smart comes through that and technology comes through that. I don’t think, in this day and age, our current politicians require much in the way of convincing that technology and smart is the way forward. What doesn’t come through, in my view and I’d like to say an informed view having read hundreds of pages on this, is local doesn’t come through. Now we’re here at a smart local energy systems summit. What I’d like to put to the panel is why local? Why not just smart? Why not smart and centralised? Why should we be looking at smart and decentralised? Why should we be thinking about local energy systems and what does this do to get us to a fairer, more affordable and lower-carbon energy system? Now I’m going to begin with Rob not because he was first last time but because I think this was originally your question, Rob [laughter], so I hope you have an answer [laughter].
Rob: It is a good question and it’s one that I’ve been asked all the way through the programme that I run. Over the last four years, that is a question that I’ve been consistently faced with. I think we know a lot more about it now actually. The journey over the last four years for me has been justifying this programme originally on the basis that you needed to integrate bits of kit locally because that’s where supply and demand came together and we had new tech that could do that really well across millions and millions of bits of kit. That was all a good justification. Indeed, it’s been great seeing some of our projects producing some of that. I was talking to ReFLEX, our Orkney project, earlier today which is using some of their EVs and smart heating technologies to work with constrained wind farms to be able to unlock the constraint on that network by ramping up the demand on some of their asset base. We’re starting to see that working much better. I think our journey has been to understand some of the broader benefits beyond that technical system of taking a local approach and this is really about being able to tailor the design of your energy system for the local environment, for the local opportunities and its abilities to use waste heat, for example. Another of our projects is GreenSCIES in North London where they’re trying to take waste heat from a lot of the commercial businesses in the area, services centres and that kind of thing using the latest generation of heat network to then take that waste heat to domestic tower blocks that need heating and upgrading the heat into domestic properties. That can’t be done everywhere. You have to have a particular kind of system to do that. If we can tailor our energy system for opportunities in particular places, we get a completely different range of benefits. We’ve learnt that it’s very much more about being able to tailor, being able to make use of the local environment and being able to engage local residents of that area in how they want their energy system designed and what benefits they want from it.
Matt: I love the point that local is where things happen, it’s where supply meets demand, it’s where the project happens but it’s also where the benefit is felt. Karen, I’m going to come to you because for UK100, local is very much in your DNA. I guess you’re majoring on local but smart is an element of the kind of projects you’re looking at. Why local? Why should this be on the government’s radar?
Karen: It’s where stuff happens, as you said. It’s where the people are. It’s where the communities can feel the co-benefits but in terms of why local authorities have such a fundamental role to play, it’s because they understand the places that they are governing. They know the communities. They know the businesses. They know the solutions that will work and I think that, more and more, because they have the planning role, they have a better appreciation than anybody else of how it all fits together. This is where we want to put our EV charging and the requirements that we need to put in place in order to enable that. I think that the solutions that exist are different everywhere and that can’t be overstated. The learning will be replicable and transferable I think but the contexts are so different that it makes a lot of sense to do it locally. The work that Rob’s organisation, UKRI (UK Research & Innovation), have done around understanding the financial benefits that come from taking a place-based approach as opposed to a place-agnostic approach really speaks for itself.
Matt: Before I come to Jeff, Teo, I’m going to start with you because I guess, from a different angle, you’re mainly smart (if I can characterise) – very smart - [laughter] but in terms of techUK, smart is the number one thing but where does local fit in for you?
Teo: Well, actually I had local planning on my notes as well because planning for infrastructure, mobility and buildings happens locally and is so crucial. Mobility is local and so your local mobility and transport services are not the same in every city and they’re not the same in every neighbourhood as well. Industry expertise is also very local. We have different regions and different areas in the UK where, again, they hold very different expertise and investment in infrastructure is also local. The pandemic, I think, has showcased that we just don’t have the right information about consumers and we don’t have the right information as to where the benefits and where the energy capacity are. So to be able to deliver what I’d like to actually call intelligent rather than smart, we have to create a better profile of people. We have to understand all the different things that they do in their lives and for me, everything is local or at least the intelligence and the data are on a local level.
Matt: Your point there about bespoke solutions because no two places are necessarily identical is absolutely spot on.
Teo: Exactly and just to mention one example, Octopus Energy did a trial with the Emirates Stadium which holds big batteries for energy storage and when they’re not using it at the stadium, it’s distributed locally. Why can’t we utilise assets that not everybody can afford at the moment? At some point, we will afford them and we will be able to transition to the point where the technology will be a lot less costly and the return on investment will be a lot greater.
Matt: I’m going to hand over to Jeff. A final word on that, Jeff. Have you anything to add?
Jeff: Just to jump in on the back of the planning point which I think is such an important one. It’s not just about energy planning. Actually, most people don’t care what energy system they’ve got. Energy delivers services and it delivers what you need to be able to do the stuff you want to do and, therefore, it’s inexorably linked with, say, spatial planning. What community do we want to live in? How do we want to build out the place we’re in? How do we want to attract industry? It’s all of that kind of stuff and economic planning as well. What local energy means in that context is what have we got most available to us and how we want to service our needs locally but when you combine it with the smart, to my mind, what the smart does in all of this is it allows you to build the smallest energy system that you need to meet your energy needs locally because it can help you overcome constraints in getting energy from A to B. It can maximise the utility of, say, the renewables you have available to you which stops you from having to import energy to an area. It also gives all of those wonderful opportunities to charge devices at the cheapest time which is good for the people using those devices but it’s also good for the local energy system because you don’t need to build it as big. It’s all linked together really strongly.
[Applause]
Rob: Can I just add to that as well because I think that’s a really good point? It’s not only about being able to build a smaller system but it’s about being able to interoperate from a single asset in somebody’s house all the way up to a national system. We very often talk about local or national. It’s not about local or national; it’s about maximising the local benefits but within a national system and making that system work right across those scales in the best possible way for everybody who is paying for that system and living in those places.
Karen: I think that energy mix thing is really important as well because you cannot stress hard enough how people would like to minimise the amount of time the road in front of their house is dug up [laughter]. If we can be a little bit more cohesive about our planning, from that perspective, then we will have the dream of the smart local energy system I think.
Rebecca: [Laughter]. Yes, definitely. I live right on the boundary of two different local authority areas actually and it’s almost impossible to get anywhere right now because the roads are just being dug up everywhere. In fact, my husband, who doesn’t really engage with my work at all and won’t be listening to this [laughter], constantly moans about the lack of coordinated planning, so I think we’ll probably all engage with that. I want to jump in on something which I think underlines a number of the conversations we’re having. We’re talking about how we maximise the use of energy locally in the smartest way and feed up. One of our largest energy uses is in heating. We hear a lot about heat pumps and we hear a lot about flexibility. I think this is very, very exciting stuff and at the same time, Matt, you talked about this earlier, the number of buildings that we’ve got that are still very poor performance in terms of their energy efficiency. I don’t know if energy efficiency is not as sexy as a heat pump or an EV [laughter].
Matt: Becky, there’s nothing sexy about loft-lagging, trust me [laughter].
Rebecca: To really maximise this, we need to have our building stock that’s capable of enabling that flexibility and yet we don’t seem to be focusing enough on the energy efficiency side of the equation. Is it because there’s a perspective that that’s already something that’s been dealt with? Is it because there’s not a business case? How important is this energy efficiency component to the ability to deliver what we want to deliver? If it’s fundamentally important, what needs to change to support that? Karen, you’re probably right in this space with a lot of local authorities who are driving the way forward in some capacities.
Karen: Sure. It’s a really complex problem and I think to try and do your question justice would be very difficult but I’ll do my best with some key musings. I think that because the housing stock is made up of millions of individual properties where there will be some commonalities but ultimately, the one size fits all approach makes it very difficult to do anything at scale at the moment. I think that there’s a real disparity between the provisions that are made for the able-to-pay market where perhaps the largest gains would be achieved. I don’t have the scientific information to back that up [laughter] but it seems like that is a key problem. There are a lot of different pots of money available from the government but they’re all very short-term. You have to jump through a lot of hoops to get them and the information is very disparate and difficult to navigate. I have worked in this sector for 20 years and I have single-glazed windows at home and I’m ashamed to admit it but it’s true. That’s because I can’t get a double-glazing person to answer my phone calls or tell me how much it’s going to cost. The fabric-first approach is clearly the one that we need to be taking to make sure our housing stock is as efficient as it possibly can be but what that means in practice is a multitude of different things coming together at scale. The conversation about skills earlier, time and again, is identified as a bit of a policy hole. The Committee on Climate Change said that the government is significantly underperforming on this. The recent Energy Bill doesn’t mention energy efficiency, so there is a huge vacuum. I think local authorities are doing what they can but ultimately, they only have agency over their social housing and some of them don’t even have that. I think that whilst they only have a very much information-providing, knowledge-sharing role and they don’t have an active role in delivering, we’re not going to get the gains at scale that we need but it is a huge priority and we are advocating very strongly that energy efficiency is taken as an approach of government immediately because I think that before we do that, everything else, as much as it will achieve, will not solve the problem and will not get us to net zero.
[Applause]
Rebecca: Just to tally, I think Jeff, you’ve received two audience applauses and Karen, you’ve now got one [laughter], so...
Matt: It’s not a competition [laughter]. Quality not quantity [laughter].
Rebecca: Jeff, I saw you nodding along. I’m going to let you bat that back in a minute but Rob, I just want to turn to you first and think about some of the PFER (Prospering From and Energy Revolution) projects because, for energy efficiency, we’re still relying on this individual approach and individuals in their homes becoming experts. I have no idea if my home is insulated. I expect not. I have got double-glazed windows because I inherited them but I have absolutely no idea and no idea where to go for advice. What we’re seeing in the PFER projects is a shift away from this very individualistic approach to looking at how we can do things at that local scale and how we can transition local energy systems and not every single individual home. Addressing some of that challenge, can we bring efficiency into that? Is there the capacity to do that?
Rob: Of course, we can bring efficiency into that and some of our projects are looking at town scale and trying, at the very least, to understand the building-by-building nature of their town and what needs to be done from an energy efficiency point of view in order to get the building fabric up, and Karen is absolutely right, which is fundamental. It’s the basic building block of an efficient energy system and we are pretty much nowhere on it, to be honest. I think there’s a missing service in our market at the moment and it’s probably difficult to supply at the moment but there’s something that integrates fabric efficiency with energy performance and bills over a longer period of time and somebody who comes into your house, that you don’t know if it’s insulated or not [laughter], and we’ll tell you if it is and we’ll offer you a service to come in an do your optimum insulation. We’ll take some of your savings to pay for that over a 20-30 year period. Maybe it stays with the house rather than the owner to get over that kind of issue. But there is this missing link, I think, with energy efficiency. One thing we do know from the Green Homes Grant – when was that? – two or three years ago is that you just can’t do this on a national basis. The one bit of that that did work well was the bit that local authorities delivered because they were able to target it in the right way. They were able to provide what their local communities needed. I think there’s a really good basis there for saying that it should be part of developing a local smart energy system and local authorities are probably well placed to try and do that.
Member of audience: Applause [laughter].
[Applause]
Rob: Thanks, Jeremy.
Rebecca: I really like that and to an extent, I agree and I also worry because we see huge advances in parts of the country where local authorities have people in them that are thinking in this area, pushing things forward and really addressing the challenge. In other areas, there may be capacity challenges, resource challenges and so on. If it’s not being driven at a national level, and I get that, what do we need to change at the national level? Jeff, I’m looking very closely at you here. What needs to happen at the national level to enable this to be delivered in a fair way across the UK so that we don’t leave parts of the UK behind?
Jeff: Alright [laughter]. So there are a couple of things. I said it in my opening comments but in case it doesn’t make it into the final cut, the responsibility of national, and I do mean national governments in this respect - thank you, yes, I know, Jen, that I didn’t say it earlier – is vision. They are the democratically elected representatives of the people and, therefore, they should be able to take the vision of that people and put it in place and say, ‘This is what we are going to be in terms of energy, economy and all of that other stuff.’ To my mind, in this case, it’s not just that energy efficiency being such an important part of hitting zero carbon. It also then comes with teeth from national government, for example, zero-carbon new build standards that are actually zero-carbon and standards and not just work-aroundable but also probably some sort of mandate on the energy efficiency of private properties, the private rented sector and social housing. Bring them up. Don’t then do another scheme to try and nationalise how you fund that. Put the responsibility, as I said before about the resources and the capabilities, down to those who are going to deliver it because you need to do that on local-by-local approaches. Housing types differ, resources differ and capabilities differ. It has to come down but it can’t just come down with a hollowed-out local authority. It has to come with the skills, the training and all of that stuff that’s coming alongside it. Yeah, it’s massively important and one final point, if you were trying to design a series of energy efficiency funding mechanisms designed to confuse and not deliver anything, then the UK would be the place you would go to for the number one example of how not to do it [laughter].
[Applause]
Matt: In many ways, this panel has been all about presenting a vision of the future which you would hope, in a sensible world and I’ll leave it up to you to decide whether we live in that or not, you would see funding follow, both public and private, and we’d start to fulfil that vision. Actually, without the money, the vision is left unfulfilled. One of the questions here is where is the money going to come from for this and sitting on the panel here, we’ve got a number of people who I think can offer different perspectives. Teo, maybe from a technology company perspective, where is the investment going to come from? Karen, councils. Rob, you’ve obviously been involved very, very heavily with the PFER programme through the industrial strategy, so where does the money come from for SLES (Smart Local Energy Systems) because, lord knows, we’re going to need a lot? Who pays to fulfil this vision? Teo, I’m interested from an industry perspective. Where do you see the money coming from? Is this going to come in through big companies selling kit to individual consumers or are we looking at a more coordinated, local, ground-up approach supported by national government which I think is what Jeff was painting a picture of?
Teo: I think in the tech industry, there is a lot of effort to communicate properly on what the technology is capable of doing. When companies are working, for example, with local authorities, they understand that there is a lack of resources and a lack of knowledge. There’s a lot of intent to understand and to help local authorities, for example, to analyse their data better, put together their investment portfolios in a better way and assess for the right technology because not all tech solutions will work everywhere. In other cases, for example, in the water sector which I think is a good example, it’s about understanding local infrastructure as well and what the right solution is because in some cases, it will be machine-learning mechanisms and in other cases, it will be just simple data analytics. In some more significant cases, for example, reducing the energy consumption for water treatment plants, it would be creating a digital twin.
Matt: But who is investing here? Who pays for SLES?
Teo: I think, from a tech perspective, it’s very different. It would be VC investment in some cases and in other cases, it would be the client, for example, the water utility and when they have analysed and created a financial portfolio, to understand what kind of technology will give them that return on investments. I have a number here for you, for example, Mott MacDonald built a digital twin for Watercare and they returned the investment 400% in two years. They created a greater accuracy of determining water supply and wastewater network capacity, for example. I think it’s understanding the numbers together with the provider and in some cases, it might not work because people want to sell you stuff.
Matt: Quite right but to get to the stuff that you can sell, Rob, I’m going to come to you now because the Prospering from the Energy Revolution Fund, at its heart, was (if I may characterise it) an innovation programme. It was about getting these ideas on the ground, proving concept and then also getting it into neighbourhoods and on the ground. So it’s innovation and that springs a whole different kind of discussion around who pays for that because it’s risky? What are your perspectives just on how we get this ready for the market? Who pays?
Rob: From that programme’s perspective, it’s interesting because one of the things we measure is how much private money comes in with the public money for an innovation programme like that. Within the life of the programme, we get about 1:1. Businesses fund the projects alongside us. Outside of that direct investment, we’ve seen about 4:1 investment in the businesses involved by VCs or by buy-outs because they see the opportunity from these businesses and want to invest in their scaling up. So there’s a whole business investment side that’s starting to build I think but I think the heart of the question you’re asking really is about how we transform our cities and that’s not going to come through a few VCs. That’s a huge quantity of money and there isn’t the quantity of money in Public Work Loans Board funding, for example. We have to bring the private sector in. We have to bring the project investors in to take part alongside our public funding and UKIB (UK Infrastructure Bank) will play a part in this as well.
Matt: I think, Karen, maybe a UK100 perspective on this? Obviously, local authority budgets have been slashed over the last decade. Local authorities, I’m guessing, aren’t in the position to bankroll this stuff and so where are they looking?
Karen: Starting from base principles again, just like with the energy system needing transformation, I think the financing system needs transformation as well for these projects. I think we need to do things differently. We need new finance models and new approaches to really help with that market generation. Rob, I completely agree with you. I think the Infrastructure Bank has a role to play here to start getting the ball rolling and it’s really encouraging to see, as well, that energy efficiency will play a part in that to some degree. We’re seeing new mechanisms emerging through necessity. Community municipal bonds have been launched within the past 12 months where communities are coming together in, I think it was, Leeds. There was less of a kind of community assembly on that but them saying, ‘We’ve got some money. What can we do with it?’ There are five pilots now across the UK where people have brought their communities together to create bonds for local net zero projects which is really encouraging.
Matt: In fact, we covered it on the pod, a few months back...
Karen: Fantastic.
Matt: ...and Abundance were issuing these and Mark Davis at Leeds University supported it. It’s really fascinating stuff with citizens bankrolling local authority projects.
Karen: You’re right and I think the point we made earlier about the loops that local authorities have to jump through to get the funding that they do get which is the short-term and very, very specifically allocated funding. That implies that you have the capacity within your local authority to have people writing those bids that may or may not be successful. That model is certainly broken and we need a longer-term investment with a longer term to spend the money coming from government funds. If I can be a little bit controversial for a minute, £9bn was announced for energy efficiency in the government’s manifesto and we’re still yet to know what’s happening with at least a third of that. There’s a significant chunk of money that could play a really significant role in the rollout of smart local energy systems but we’re just waiting to find out how it’s going to be deployed.
Rebecca:
I want to turn the conversation a little bit to something that we haven’t talked much about yet which is the people in smart local energy systems. How important is it to engage people and how do we engage them? Karen, you just mentioned citizens assemblies and that’s certainly one way of engaging. It’s a different way of engaging than we might have seen when we’re thinking about treating people as customers who might be able to purchase some of these innovative solutions or are there other ways in which they could be engaged? Rob, I’m sort of looking to you initially because reflecting on the spectrum of projects that you’ve seen, how important are people in delivering all of this and what roles do people really need to play?
Rob: Well, nothing gets delivered without people I don’t think [laughter].
Matt: It depends how smart the system is really [laughter].
Rob: Is that right?
Rebecca: Back to The Jetsons there [laughter].
Rob: Yeah, exactly. I mean I think this idea of engaging the end users of our system, me and you who pay the energy bills, is a really interesting question. Some people are very ahead of the curve and want to play around with every asset in their house and do the right thing with adjusting their demand profile.
Rebecca: We have one right here [laughter].
Rob: Yeah, Jeff is one. I know I’ve seen him on Twitter [laughter] but there are 99% of people who really won’t be ever doing that and we’re just going to have to do it for them. Engagement means, for the vast majority of people, providing something that works, that’s going to be good value to them, that’s going to be comfortable and probably learn about what they do with their lives and optimise it for them. I think that’s where we have to head with engagement. If I’m thinking about it from a product/sales point of view, that’s where we have to engage people better in the way that we design our products and services to meet people’s needs. I’ve got a real bugbear about behaviour change and people constantly talking about needing people to change their behaviour. We don’t change our behaviour. We just don’t. We need to provide a range of services that meet the needs of different groups of people and provide their net zero lives in the future. That’s my view.
Rebecca: Come on, Jeff. You’re our guinea pig with a lot of these solutions, aren’t you? Jeff is actually the one person that probably will change his behaviour [laughter].
Matt: He’s like, ‘No, I won’t!’ [Laughter]
Jeff: Yeah, constantly. I was on a previous Local Zero pod and we all agreed that there was a question about what would happen if we had a million Jeffs and I think the answer was it would be a disaster [laughter] because I do play and you don’t want a million Jefffs playing with the energy system broadly speaking [laughter].
Rebecca: I’m just scared of the vision of a million Jeffs [laughter].
Matt: I’m going back to that conversation in my mind, Jeff, and just realising how abstract it was now.
Jeff: Yeah, I’d really love it if we could digital twin that though [laughter]. Coming back to a point I made earlier, I think engagement is going to mean lots of different things but one of them, linking with the point about investment actually, is thinking about local energy, what you want in terms of engagement is a really clear idea about what the local people of that place value, need and prefer because that gives whoever is going to be taking decisions about energy a really clear mandate to go and do it but also, it gives a lot of certainty. Therefore, if you want, in that place, to then drive investment, you say, ‘Well, we are definitely going to build this and so come and invest. Come and help us do that.’ Actually, it’s much easier to get certainty on local things with these really complex systems than it is for a whole national system where you’ve got vast amounts of uncertainty. That engagement is crucial and I think that can only be done locally. The engagement of people within that energy system should be according to their desire to engage with that energy system and frankly, Rob is spot on in that 99% or maybe 90% of people actually... if you look at surveying and that kind of thing, there are about 10% of geeks out there or various on the spectrum.
Matt: 90% of whom are in here [laughter].
Jeff: But, as it happens, all of the research on people and smart stuff has been done on the geeks and then extrapolated to the rest of the people who really are not the same. Huell will definitely have a question on this in a minute I bet [laughter]. What we actually need is research on normal people and what they’re prepared to accept and what they want to do within this because that’s going to help businesses that are going to be helping through this zero-carbon journey, design their propositions about what people actually want, how much they’re prepared to engage and how much they’re prepared to seed, say, to a third party to automate some of this stuff with permission which is the most important thing. Yeah, don’t build a system around a million Jeffs [laughter].
Rebecca: No, no and I used to think that I was a geek and I’m the total opposite of a geek. I used to think I was [laughter] and then I got my EV and I tried to figure out how the charger would work [laughter].
Jeff: Six weeks [laughter].
Rebecca: I even, after chatting to Jeff, moved to the Octopus tariff where I get really cheap electricity in the middle of the night for my EV. That was great advice...
Jeff: Other suppliers are available [laughter].
Rebecca: ...except that it took me about six weeks to figure out how to work the charger to get it to charge in that time period. That was great for a bit and then the entire charger stopped working and so instead of fixing it, we just ran a cable in through our garage and was charging that way [laughter]. I’m somebody that works in this space and I’m an engineer by background, so I should get this. So how do we change the way that we design our tech, deploy our tech and support people so that people that are like me... in fact, people that are even... how does my gran use it?
Teo: Yes, great question. I definitely agree with what Rob and Jeff have said. I don’t think that there are going to be a lot of people that will be engaging with their smart homes devices. I think the normal person would like to go home, have a glass of wine or a soft drink, cook, sit on the sofa and whatever and not pay millions of pounds in energy bills [laughter]. There are a couple of things. The tech industry is thinking about what is a better way to collect data in creating those profiles. We’ve done some research in our Connected Home work where we’ve understood that, for example, the biggest percentage of people who have energy efficiency technology in the home are actually monitoring and engaging with it through a smartphone. So if you know this information, you can then easily think about what the services are that I could provide for a smartphone rather than a computer, a website, email or whatever it is. There will be other products and services that people will be engaging with in a different way. For example, we saw that some other smart home devices like entertainment are mostly controlled by computers because it might be at different times of day, etcetera. Having this understanding is extremely important for interoperability and we’re still working towards that interoperable environment where you can pair up devices, easily switch them and play around with them in the house without having to take extra time to understand your home charger as well.
Matt: I’m conscious that we’re pretty much out of time. However, if we maybe take two questions and we’ll deal with them in turn and then I think we’ll let you go your separate ways. Sorry, if we could just keep the questions clipped, short and brief please? I’ve said the same thing three times just to emphasise it [laughter].
Rob: It turns out there are a million Jeffs. If you take the adult population of Britain, about 40 million, 2.5%, which is the innovator group in Rogers’ diffusion of innovation theory, that’s one million adults. My point was actually about efficiency. Why doesn’t efficiency work? Because it’s a negative proposition. I have a house and I call it Geoff, a quite important distinction. It’s inefficient. It’s ineffective. I have to sort it out. It is broken. It’s nothing like the conversation that you could have if you said, ‘I want to make it productive. I want to upgrade it. I want to make it shiny, new and lovely.’ We need to change how we’re talking about what we’re trying to do. We’re not trying to fix broken things, even though that’s what they are. We’re trying to make fantastic new things...
Matt: So the question, please?
Rob: That was the question. What do we think of that?
Matt: Okay. Karen?
Karen: Local authorities are doing what they can with what they have and many of them are very ambitious and quite effective at that but I think that local democracy isn’t the problem. It’s the lack of long-term support for them to be able to deliver net zero and smart local energy.
[Applause]
Rebecca: Does anyone want to answer the question of how we make Geoff more efficient rather than sexy? [Laughter]
Jeff: I’m prepared to answer that [laughter].
Matt: Jeff, please do.
Jeff: It came back to something I said early doors actually. There was a really good survey from UKERC (UK Energy Research Centre) quite a while back and they asked people and said – it was 80% carbon target but to get to net zero, let’s say – ‘You’re going to have to pay to get to net zero. What do you expect in return?’ So it’s like the social contract bit. The thing that came out of that that I really loved was that they said lots of really important things but the one thing they said is it has to be better than what it is today and that’s Huell’s point. It’s that we’re going to go and fix Geoff
Matt: We’re going to make Geoff better? [Laughter]
Jeff: I was about to say to make Geoff more pleasurable [laughter]. I think that’s what I mean. In this instance, energy efficiency means more comfortable. It’s not just about saving you money, blah, blah, blah. It’s about feeling more comfortable in my own home.
Matt: So Geoff becomes a more pleasant experience?
Jeff: Yeah. You see I think you’re making Geoff more comfortable, more pleasurable, smarter and better in every way [laughter].
Member of audience: More productive?
Jeff: You could not make Geoff more productive [laughter].
Rebecca: And now the vision of a thousand or a million Geoffs terrifies me even more [laughter]. I’d like to ask a question to each of our panel members to wrap it up. We’re talking about a fantastic vision but actually, to deliver this requires fundamental changes to how the UK operates. So how do we persuade our policymakers and government to make these changes? Rob, this is an issue you have been grappling with.
Rob: It is, indeed, and whoever asked the question is absolutely right. It does require a different way of thinking about the system. It’s not going to be the same system as Jeff was mentioning earlier. We know it’s not going to be the same system. I think we just need to accept that and move to the new system with a wholehearted way of going about things. I think that we need to be clearer about the benefits of this approach, so I think that is at the heart of this because it does require a different way of governing the system and that’s inherently hard for BEIS and OFGEM to deal with. We have to lead with the benefits. We have to explain why this is going to create a better way to net zero and sell it in a much better way. I think that’s the key to it for me.
Rebecca: Teo.
Teo: I think the current energy crisis is actually a great opportunity for us to stress how we fundamentally have to change behaviour... well, not behaviour but the way we think about the energy system. [Laughter] Sorry, Rob. I also think that presenting the economic case for change and presenting the opportunities, especially in the digitalisation of the system, and how much money will that for one save and how much money we could also attract within the UK for investment. If we are utilising the tech talent and the tech resources in the UK, we could strive to become a leader in this space. So why not take all those great technological advances, for example, AI and quantum computing, and apply them in a new way in infrastructure and create that investment case for international and local growth?
Rebecca: Thanks.
Karen: Growth was going to be the word I would use. I think that that is going to be the message that resonates as much as that may run counter to, perhaps, a more conventional understanding of what net zero delivery may look like. I think that we have to sell this around where the benefits are. I completely agree with what Rob said. Now as a recovering academic [laughter], I was involved in a project that was looking at visioning and backcasting. Where do we want to be in 2050? How do we fill in the gaps between now and then to get there? I think there’s a lot of potential in that approach. I think that it helps to reframe and to better understand some of the transformation that is required. I don’t think that’s something we can sell to the government but I think that as a community that is working towards making the case, making the proposition and making it sound like something that can be delivered, that’s probably a useful starting point for us.
Rebecca: Thanks. Now you’re the recovering academic. Jeff, as a recovering regulator, you get the last say. How do we persuade policymakers to make this change?
Jeff: I’ll come back to what I said at the start. Smart local energy systems, within whatever the rest of the energy system is, are the most productive, cheapest and most acceptable way to get to zero carbon because it bakes in a lot of that democracy. I also said at the start that governments need to set a vision and then they need to do everything they can to enable that to happen and then they need to get out of the way. Successful countries that have delivered consistent, very high renewables and very zero-carbon economies have basically had political consensus and an agreement to take the energy decision-making out of politics and then devolve it down to those who are actually best placed to deliver. I’ve been saying for years that we need something like that in the UK but I really think we do because it’s too political and it doesn’t get anywhere fast, so we need vision enablement and get out the way.
[Applause followed by music flourish]
Rebecca: I just want to say a huge, huge, huge thank you to our guests today and also to our fabulous live audience.
[Applause]
You have been listening to Local Zero. If you haven’t already, go and find us and follow us on Twitter @LocalZeroPod and get involved with discussions. Find us wherever you get your podcasts from. We’re on every platform you can think of. Just search Local Zero and subscribe and email us at LocalZeroPod@gmail.com. We will do our best to respond to any requests but for now, thank you and goodbye.
[Applause and cheering]
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