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Solving the Energy Trilemma

Phil Taylor - 4th June 2015
Solving the Energy Trilemma

The world faces steep challenges in meeting current and future energy demands with low-carbon energy sources. To attain Goal 7 of the Sustainable Development Goals: ‘ensure access to affordable, reliable, sustainable, and modern energy for all’, target indicators should look at appropriate business models for increasing energy efficiency, identify the true cost of carbon for non-renewable energy supply to increase the share of renewables and define ‘modern energy’.

Achieving universal access to secure, sustainable and affordable energy is known as the ‘energy trilemma’. If SDG 7 is to be realized it requires an approach to energy that is customer-led — a society pull rather than a technology push. Access to energy is important for a variety of reasons including health, economic development, education, and communications, but target indicators need to identify what kind of ‘modern energy’ is required and for what purpose.

SDG 7 needs to define what is meant by the term ‘modern energy’. If it means high power quality, then the standards used in Europe or other developed parts of the world may not be appropriate for countries that do not require the same level of power quality to meet their needs. High power quality also means higher infrastructure costs and higher levels of carbon in the energy system. We must be careful in assuming that all people, all cultures want the same type of access to affordable and reliable energy. Simply because richer nations have energy infrastructure everywhere doesn’t mean that other countries want the same, which is why ‘energy for all’ should be attuned with local cultural values and needs of individual countries.

Price carbon and boost low-carbon energy 

Target 7.2 is about increasing the share of renewables, but does not mention the amount of renewables or the role of other low-carbon sources of energy such as nuclear. In order for countries to make the transition to low-carbon energy nuclear should also be an option, especially in eliminating dependence on coal. There should be a target in place that increases renewable energy generation specifically. While much progress has been made in the deployment of renewable energy technologies, there is much work to be done in increasing generation of renewable energy itself.

If for example China and other countries continue to build coal fired power stations how can the share of renewables be increased? And if renewable energy generation increases there will need to be a reduction in non-renewable energy sources if benefits are to be realised. Decommissioning (or reducing the running time) of fossil fuel-based energy sources cannot take place all at once, but needs to be planned carefully, which requires a ‘system architect’ [1].

Indicators for Target 7.2 need to address the actual cost of carbon otherwise it will be very hard for countries, especially low-income economies, to invest in renewables instead of fossil fuel based sources of energy. Countries need appropriate costing and taxation of carbon. Transparent and appropriate costing of carbon through carbon trading or taxation schemes will ensure access to sustainable energy supply for all by taking revenues generated and reinvesting them into the low-carbon transition.

There are currently smart grid technologies and electrical energy storage options [2] for increasing access to renewable energy, but the share of renewables will never change significantly unless the balance sheet or investment proposition is changed for fossil fuels. An indicator that looks at the costing of carbon in relation to increasing the share of renewables would help set countries on track for a low-carbon future. As renewables continue to penetrate the global energy market all countries will start to run into energy balancing problems for the grid and issues with stability.

This is why energy storage is vital to making clean energy resources available to all. While energy storage is viewed as too expensive for wide scale deployment now, it is only a matter of time before it becomes widely available as the cost of carbon increases and the cost of renewable energy supply goes down. Demonstrations in the UK have shown the viability of electrical energy storage and the valuable impact it has on energy efficiency and distribution [3].

For developing and developed economies there is also potential for using recycled batteries from electric vehicles to provide on or off-grid energy supplies. This prospect is of special interest to isolated rural or urban communities who do not have access to reliable energy infrastructure. Community-led off-grid sources of electric power, mainly from renewables, need to be seriously considered for target 7.b as this would likely help countries save considerable capital by using microgeneration instead of centralised services. There is evidence that community-led energy projects can build stronger communities and reduce costs and off-grid communities in developing countries, such as Malawi, have improved health outcomes [4]. Therefore an indicator for off-grid energy services is needed.

Aside from the problems with generalising “modern energy” to all countries and cultures, the proposed indicators do not specify whether developments emerge from centralized electricity grid infrastructure, or from customer-driven, off-grid supply. These need to be considered seriously within the indicators, particularly as a way of accounting across cultures and needs.

Community-led power schemes, mainly from renewables and supported by technologies such as second-life electric vehicle batteries will meet the needs of both rural and urban groups – and, driven by user needs, add “appropriate” to affordable, reliable and low-carbon energy solutions. The speed of deployment and capital requirements of microgeneration and local delivery also compare favorably to centralised services as well as embedding energy-sector economic activity within communities.

Increasing energy efficiency

There is a problem with the way we buy and sell energy in European countries such as the UK. There is a set of generation-obsessed national and international energy policies in place that provide rewards, targets and incentives for renewable energy generation, but little for energy savings. What underlies all of this is the ‘unbundled’ [5] energy market that separates energy supply from transmission and distribution.

In terms of profit, the energy supplier has little value in increasing energy efficiency in an unbundled market because they simply sell electricity, and have nothing to do with the wires that deliver it. When you have a split between supply and assets you break the link between consumption and infrastructure savings, which makes energy efficiency hard to get off the ground. However, this is not the case in all countries.

For example in India the supply company and the utility are part of the same business. In the case where they have overloaded grid infrastructure and don’t want to make costly upgrades to the grid, they could decide to put energy efficiency measures in place instead. Since the supplier and utility are bundled together this can be done easily and the savings from energy efficiency could outweigh costs of investing in more infrastructure. However, we also need to encourage efficiency at the level of the end-user which smart grid technologies play an important role in allowing energy users to monitor their energy usage and identify potential savings.

An indicator for Target 7.3 should address specifically what business models countries are using to increase and deliver energy efficiency. If they are using bundled models this is more likely to increase efficiency overall than if the supply and transmission were separate. Other countries that are beginning to establish or increase accessibility to electricity should avoid having an unbundled market. Instead they should look at developing a system that sells energy as a service [6] rather than by the kilowatt-hour.

When considering energy, similarly to dealing with hunger, cities and urban energy systems must be given due attention for Goal 7 as the majority of populations will increasingly live in urban areas. While the goal focuses on global access to sustainable energy supply the largest energy demands come from cities, to balance supply with demand requires digitally-enabled solutions to providing sustainable energy, which are being tested at Science Central in Newcastle, UK. In making the low-carbon transition cities will not only be able to increase energy efficiency, but reduce air pollution, improve public health and well-being, and create new forms of economy based on innovation.

Summary of action points for reaching SDGs on energy:

  • Support bundled instead of unbundled energy markets as a way to increase energy efficiency and ensure sustainable energy supply for all.
  • Account for off-grid solutions as part of user-appropriate energy provision and promote community-led energy provision to unlock non-centralised energy supply.
  • Set a target for not only increasing the share of renewables but total renewable energy generation as part of a low-carbon transition plan.
  • Cost carbon appropriately as it is mainly a ‘hidden cost’ in most countries’ energy balance sheets and diverts attention from the actual cost of fossil fuel dependence.
  • Define what is meant by ‘modern energy’ in the targets and indicators for Goal 7, helping countries define their own energy needs and values, which should be led by community initiatives.

 

Phil Taylor is Professor of Electrical Power Systems and Director of the Institute of Sustainability at Newcastle University. He is an internationally leading researcher and industrial expert in energy storage system management, infrastructure and control. He works regularly with suppliers and distributers in the UK on the use of energy storage for power quality improvement in distribution networks. Phil is also an advisor on energy storage to the Ministry of Science, Technology and Innovation in Malaysia and Director of the EPSRC-funded Multidisciplinary Centre for Doctoral Training in Energy. Phil.Taylor@newcastle.ac.uk. This post is art of a blog series from Newcastle University Societal Challenge Theme Institutes giving recommendations for targets and indicators of the UN Sustainable Development Goals.

Photo credit: eye of einstein / Foter / CC BY

 

Notes

[1] Taylor, P. ‘We need an independent architect to redesign the UK energy industry’. The Guardian.

[2] Taylor, P. Energy Storage – Sheltering networks from the ‘perfect storm’ http://www.abb.co.uk/cawp/seitp202/4a808cb15062d1b8c12578380055f70a.aspx

[3] Lyons, PF, Wade, NS, Jiang, T, Taylor, P, Hashiesh, F, Michel, M, Miller, D. ‘Design and analysis of electrical energy storage demonstration projects on UK distribution networks’, Applied Energy, 137: 677-691

[4] ‘Evaluation of Off-grid Community Managed Renewable Energy Projects in Malawi’. IOD PARC

[5] Anuta, OH, Taylor, P, Jones, D, McEntee, T, Wade, N. (2014) ‘An international review of the implications of regulatory and electricity market structures on the emergence of grid scale electricity storage’, Renewable and Sustainable Energy Reviews, 38: 489-508

[6] Hinells, PBM, Rezessy, S. ‘Liberating the power of Energy Services and ESCOs in a liberalised energy market’.