What opportunities does COP26 represent for the utilities sector, and how can we capitalise on them?
COP26 in Glasgow gives us a unique opportunity to set a clear pathway to net zero emissions globally. As the newly appointed US Presidential Envoy for Climate John Kerry puts it ‘it is the last best chance the world has to come together’. It can also act as a forum in which leadership in British technologies can accelerate efforts to tackle the climate emergency, applying our expertise to global problems.
The UK has, in the last decade, decarbonised its electricity system faster than any other in the world. Progressive policies from the government mean companies across the energy sector have invested in renewable electricity technologies including biomass, wind and solar, which have drastically cut carbon emissions. Achievements we should celebrate as the world’s leaders descend on Glasgow.
But we know further challenges lie ahead. We will need more renewables to help decarbonise heating and transport, as well as investment in flexible generation and energy storage solutions to help balance demand on the grid. The power sector is also where we can deploy cutting-edge negative emissions technologies which complement our efforts to radically reduce emissions and are critical to reaching net zero.
At COP25 in Madrid, I announced Drax’s world-leading ambition to be carbon negative by 2030. This ambition could be achieved by deploying the negative emissions technology, bioenergy with carbon capture and storage (BECCS). BECCS is a major opportunity to create and preserve jobs in new clean technologies as we decarbonise the economy.
What does the UK need to achieve in the next nine months to present itself as a world leader in tackling climate change? What role can utilities play in that?
The next nine months will be critical to build on the momentum the prime minister outlined in his 10-point environmental plant last year, as well as the publication of the Energy White Paper. However, if we are to capitalise on these opportunities, a clear pathway out of the pandemic and how the UK can build back better will be key.
As part of the white paper, the government committed to defining its biomass strategy by 2022, with engagement with key stakeholders required ahead of COP. It recognised biomass is unique amongst renewables technologies due to its wide array of applications, including as a substitute for fossil-fuel based products, in power generation and in hydrogen production, and even in new forms of plastics. Its vital use in delivering negative emissions makes biomass one of the world’s most valuable tools for reaching net zero emissions.
It’s widely recognised that negative emissions technologies, like BECCS, will be essential to meeting the UK’s legally binding net zero by 2050 target. The government’s Energy White Paper, the Climate Change Committee (CCC) – and National Grid in its most recent Future Energy Scenarios report – all say that the UK cannot meet net zero without negative emissions from technologies such as BECCS.
As well as this, the UN’s IPCC says that negative emissions technologies, like BECCS, will be needed around the world to help offset emissions from sectors that are the hardest to decarbonise, such as agriculture and aviation.
The government has set out its ambition to position the UK as a leader in the development and deployment of these technologies. Last year it launched a consultation on greenhouse gas removal technologies, and it is expected that funding will be released in the first half of 2021 to progress two carbon capture and storage industrial clusters.
Focus is also returning to tried and tested technologies such as pumped storage hydro (PSH). which provides essential system support services to maintain secure electricity supplies and enable more renewables like wind and solar to come online. PSH is the only technology currently available that can provide energy storage at scale. Energy storage as well as the provision of ancillary services ensure the grid operates safely and efficiently and will be increasingly important as the UK is set to quadruple offshore wind capacity by 2030, as set out in the PM’s 10 point plan.
Drax’s Cruachan Power Station, in Argyll, Scotland accounts for 30 per cent of the UK’s pumped storage capacity by volume and can power a city for over 15 hours. Expanding its capacity would enable more renewables such as wind to come online, which is essential for the UK’s net zero target. It would also generate over 200 jobs during the 5-7-year construction period, supporting rural communities in Scotland.
Investment in such projects is being held back due to the absence of a route to market for PSH, even though similar mechanisms exist and have benefited other energy technologies. Existing mechanisms, such as the one available for interconnectors, could be adapted to provide regulatory certainty and bring forward new investment in PSH in the UK.
At Drax we stand ready to invest in BECCS at our power station in North Yorkshire, as well as expanding our Cruachan pumped storage hydro plant in Scotland. However, the government needs to give a clear indication on the support mechanisms for the implementation of these green technologies and provide policy and regulatory frameworks to reduce uncertainty and enable companies like ours to invest.
Where do you see further opportunities for pan-utilities co-operation on the path to decarbonisation?
Drax is a founding member of the Zero Carbon Humber bid – a consortium of 12 industrial businesses which are striving to decarbonise industries across the Humber by using BECCS, hydrogen and carbon capture and storage in other processes. Creating a CCS industrial cluster.
The Humber is the UK’s most carbon intensive industrial cluster and decarbonising it would have the greatest impact on meeting our carbon targets whilst protecting more than 55,000 jobs and creating tens of thousands more. A report by Vivid Economics, commissioned by Drax found that almost 50,000 jobs would be created and supported through the deployment of BECCS, hydrogen and CCS in the region. Nationally this could support more than 200,00 jobs, so the opportunity is huge.
But deploying an infrastructure project of this scale is not without its challenges, and so it’s vital industries, communities and government work hand in hand, towards the shared goal of decarbonisation.
What is your principle ask of government and/or regulators to unlock the sector’s potential to accelerate the green transition?
Drax’s ambition is only achievable with an effective negative emissions policy and investment framework from government. The UK’s electricity grid has decarbonised at a faster rate than any other in the world as a result of the government introducing an effective carbon pricing regime and market incentives for the development of renewables technologies like wind, solar and biomass. Similar incentives for deployment of negative emissions technologies would be needed for BECCS to be delivered at scale.
At present, there is no market or policy mechanism in place to reward the negative emissions produced by technologies such as BECCS, however Drax is working with to the government to develop potential support mechanisms for BECCS and clarity is emerging on milestones for regulatory and policy support.
Significant investment will be needed in skills and retraining if Drax and other companies are to have access to the workforce needed to make clean technologies a success. This is especially important across the north. There is already a skills gap in the region, with the government’s Working Futures model forecasting that from 2022 key sectors such as electricity and gas, engineering and construction will require higher qualifications than currently available.
This means that action is needed now if the region is to have a future ready workforce.
At Drax we’re already playing our part in this. We recently announced our “Mobilising a Million” initiative, which aims to connect with one million people by 2025 to improve skills, education, employability, and opportunity. And last year we announced a five-year partnership with Selby College, to improve skills, training, and education across the north. More recently Removing barriers to learning and helping to create more career opportunities within the energy industry, will not just help Drax, it will enable the UK to build back better, creating a post-covid economic recovery with thriving communities.
How can utilities help to encourage all consumers to be more active participants in the net-zero journey?
Over the next decade, we’re going to see a major shift in the way electricity is generated and consumed, and we all have a role to play in how we encourage people to join us on that journey. Creating a green, stable electricity grid will be key to driving the green recovery.
Decarbonising the transport sector is key to the UK achieving net zero. Electric vehicles (EVs) and their prevalence on UK roads is set to increase rapidly over the next 30 years. 2020 saw their popularity skyrocket with battery electric and plug-in hybrid electric cars together accounting for more than one in 10 registrations– up from around one in 30 in 2019. National Grid projections suggest that the UK stock of EVs could reach between 2.7 and 10.6 million by 2030 and could rise as high as 36 million by 2040.
Last year we launched Drax Electric Vehicles, an end-to-end electric vehicle solution that helps businesses wanting to make the switch, to do so easily. We’re also pioneering cutting edge vehicle-to-grid technology with our first V2G charging station recently installed at our Ipswich office.
V2G technology has the potential to play a key role in managing demand on the grid in the future, but will also enable businesses to maximise their energy use, turning the car’s battery into an asset which can be used to power offices when electricity costs are high.
We’re also working with more than 2,000 independent generators such as farmers who have solar panels and small wind turbines, giving them a route to market for the renewable power they produce, allowing them to create a revenue whilst supporting a greener grid.