edienetmission-possible NetZero

supporting partner

Achieving net-zero carbon in UTILITIES edienetMission-Possible1

EXPLORE WHAT NET-ZERO CARBON LOOKS LIKE

FOR UK UTILITIES

This utilities sector insight report is published by edie the purpose-driven business media brand that empowers sustainability energy and environmental professionals of all levels to make business more sustainable through award-winning content and events

For more information please contact LukeNichollsfav-housecom for content and DavidGriffithsfav-housecom for sponsorship opportunities

September 2019

copy Faversham House Group Ltd 2019 edie content may be copied or forwarded for individual use only No other reproduction or distribution is permitted without prior written consent

2 edienetMission-PossibleAchieving net-zero carbon in UTILITIES

Britainrsquos utilities sector has a golden opportunity to position itself at the forefront of the net-zero revolution With the right support and direction energy and water suppliers large and small can deliver transformative systems that radically reduce carbon whilst enabling and empowering their customers to do the same

The UKrsquos world-leading commitment to reach net-zero carbon emissions by 2050 was a monumental step for climate action and it couldnrsquot have come at a better time As the Governmentrsquos official advisers the Committee on Climate Change (CCC) concluded in their hugely influential recommendations report earlier in the year the transition to net-zero is necessary feasible and cost-effective These three words absolutely ring true for the utilities industry Necessary because the energy supply sector is responsible for almost a third of all carbon dioxide (CO2) emissions Feasible because the same sector was the largest contributor to the decrease in carbon dioxide

emissions between 2017 and 2018 thanks primarily to the switch from coal to natural gas and the simultaneous growth in renewable energy sources And cost-effective because the price of key net-zero-enabling technologies ndash primarily renewables and battery storage ndash is continuing to fall whilst the evolution of the demand-response market has opened up exciting new income streams

But of course setting a net-zero target is the easy part Utilities businesses now face a number of major hurdles on the road to radically reduced emissions many of which will require increased government support better cross-industry collaboration and much more focus on innovation Decarbonising the supply of heat cutting emissions related to pumping and treatment processes and accelerating the shift to zero-emission vehicles represent three such challenges ndash but behind each of them a golden opportunity remains for utilities to take the lead and proactively scale-up the

solutions that will support the future energy and water system

This sector insight report is all about seizing that opportunity Produced in association with UK Power Networks Services the report is the first in a brand-new series from edie which will investigate exactly how sustainability and energy professionals within the UKrsquos largest industries can take action to achieve lsquonet-zero carbonrsquo status for their businesses ndash from agreeing and setting targets to scaling-up on-site solutions and empowering others in the business to accelerate change

The series is inspired by Mission Possible ndash ediersquos award-winning purpose-driven campaign which is empowering businesses to ramp up efforts across all areas of sustainable development As such we will explore what lsquonet-zerorsquo utilities business of the future looks like through the lens of three of the campaignrsquos key pillars of energy resources mobility and the built environment The majority of this reportrsquos content was developed as a result of a series of in-depth research calls held with a number of in-house sustainability energy and carbon managers working across energy and water businesses along with industry body Energy UK Best-practice case studies gathered by ediersquos editorial team and exclusive findings from some of ediersquos own industry surveys are also embedded throughout the report providing readers with a unique insight into how utilities businesses can make net-zero carbon a reality l

ACHIEVING NET-ZERO CARBON UTILITIES AN INTRODUCTION

LUKE NICHOLLSCONTENT DIRECTORedie

edienetmission-possible NetZero

supporting partnerInspired by

The facts and stats on this page were accurate as of the date of ediersquos net-zero utilities report publication (25 September 2019)

As the largest contributor to carbon emissions Britainrsquos utilities sector must position itself at the forefront of the net-zero revolution And with the right policy support organisational focus and

cross-industry collaboration this truly is Mission Possible for energy and water firms alike Here are the facts and stats powering the utilities sectorrsquos transition to net-zero carbon

2030 YEAR BY WHICH ALL WATER COMPANIES IN ENGLAND HAVE VOLUNTARILY COMMITTED TO ACHIEVE NET-ZERO CARBON EMISSIONS

Click each stat for more information

PROPORTION OF UK EMISSIONS FROM THE SUPPLY OF ENERGY IN 201827

11 MILLION NUMBER OF TREES TO BE PLANTED BY THE UKrsquoS 9 MAJOR WATER AND SEWERAGE PROVIDERS BY 2030

2266 KILOTONNES ANNUAL CO2 EQUIVALENT EMISSIONS PRODUCED BY WATER COMPANIES IN ENGLAND AND WALES

23 MILLION NUMBER OF HOMES THAT WILL NEED

TO INSTALL NEW LOW-CARBON HEATING SOLUTIONS BY 2050

37 MILLION TONNES AMOUNT OF CO2 THAT COULD BE REMOVED FROM ATMOSPHERE VIA BIOMASS POWER GENERATION PAIRED WITH CARBON CAPTURE AND STORAGE

ACHIEVING NET-ZERO CARBON IN UTILITIES

PROPORTION OF EVS THAT COULD BE UTILISING SMART CHARGING TECH BY 205075

28 TRILLION NUMBER OF DATA POINTS BEING COLLECTED IN 2050 TO UNDERSTAND WHERE EXACTLY EVS ARE CHARGING ON THE ELECTRICITY SYSTEM

68 REDUCTION IN EMISSIONS FROM UK

POWER STATIONS BETWEEN 1990 AND 2018 DESPITE NATIONAL ELECTRICITY

CONSUMPTION INCREASING BY 8 OVER THIS SAME PERIOD

72 REDUCTION IN EMISSIONS

FROM ENERGY SUPPLY SECTOR BETWEEN 2017

AND 2018

80 PROPORTION OF THE UKrsquoS 25 MILLION

HOMES CURRENTLY POWERED BY NATURAL GAS

84 PROPORTION OF DOMESTIC ENERGY CONSUMERS WHO CONSIDER RENEWABLE ENERGY TO BE IMPORTANT TO THEM

ONE-THIRD PROPORTION OF HOMES THAT COULD

BE HEATED BY HYDROGEN BY 2050

Achieving net-zero carbon in UTILITIES 4 edienetMission-Possible

Escalating climate change population growth resource scarcity and an increased consumer

demand for clean energy have created something of a lsquoperfect stormrsquo for utilities businesses when it comes to championing

environmental sustainability and accelerating the transition to net-zero carbon

NET-ZERO ENERGY amp RESOURCES

Race Bank Wind Farm off the coast of Norfolk Northumbrian Water will source 30 of its renewable electricity directly from this windfarm under a CPPA with Oslashrsted Photo Oslashrsted

5 edienetMission-PossibleAchieving net-zero carbon in UTILITIES

Eleven years on from the passing of the 2008 Climate Change Act Britainrsquos power sector has led the way in the decarbonisation of the economy making huge strides when it comes to replacing fossil fuels with clean energy sources and increasing the number of lsquolow-carbonrsquo jobs across the country

There is nonetheless still a long way to go And for energy companies the Governmentrsquos 2050 net-zero carbon target has massive implications from both a supplier and end-user perspective On the supply side around 27 of the UKrsquos greenhouse gas emissions were attributable to the supply of energy in 2018 with virtually all of this being CO21 Whilst a general improvement in energy efficiency transition from an industrial economy have led to a net decline in energy supply across the country in recent years the national population is

expected to soar from 664 million today to almost 80 million in 20502 while a more extreme climate is likely to increase demand for heating and cooling Thus the net amount of energy being supplied by utility firms to the residential sector is projected to begin rising again from 2025 onwards3 and peak electricity demand could rise from around 65GW today to 75-80GW in 20504

So the supply of lsquonet-zero carbonrsquo energy by 2050 will only be achievable if this energy is being supplied entirely from low-carbon sources Thankfully this is a transformation that is already beginning to take shape among the utilities sector ndash particularly through the switch away from coal-fired power stations towards renewable energy systems Last year coal made up 7 of fuel used for electricity generation ndash

down from 65 in 1990 Nuclear and renewables meanwhile accounted for 47 of the fuel mix up from 22 in 1990 This is a crucial shift that must continue to accelerate over the coming years Indeed the lsquoBig Sixrsquo energy suppliers ndash which account for around three-quarters of the domestic electricity and gas markets ndash are ramping up their ambitions at a domestic level with EON recently announcing it would draw from its own windfarms biomass plants and solar arrays to supply its 33 million customers with 100 renewable electricity

In order to further accelerate the renewables revolution over the coming years a long line of organisations investors industry groups and public bodies have called for additional support and incentives from the Government Specifically policymakers are being urged to reinstate Contracts for Difference (CfDs) auctions for the established technologies of solar PV and onshore wind which have been effectively locked out of the funding mechanism since 2015 in favour of less-established technologies such as offshore wind

CLIMATE CHANGE IS THE DEFINING ISSUE OF OUR ERA AND ONE THAT ENERGY CUSTOMERS ARE INCREASINGLY CONCERNED ABOUT WE BELIEVE LARGE-SCALE ACTION CAN MAKE SIGNIFICANT CHANGE POSSIBLE THATrsquoS WHY WErsquoRE PROVIDING ALL OF OUR RESIDENTIAL CUSTOMERS WITH 100 RENEWABLE ELECTRICITY AS STANDARD ndash A CHANGE AT A SCALE NEVER SEEN BEFORE IN BRITAIN - MICHAEL LEWIS CHIEF EXECUTIVE EON UK

Spotlight on

Wastewater treatment process emissionsHaving made a bold commitment to be net-zero carbon by 2030 ndash 20 years ahead of the rest of the UK economy ndash the water sector must now look to tackle the real elephant in the room the greenhouse gas emissions generated from the processes of wastewater treatment plants

Wastewater treatment which removes contaminants from wastewater or sewage and converts the substance into an effluent that can be returned to the water cycle safely is an energy-intensive process ndash particularly aeration which involves the biological treatment of the wastewater This process emits large amounts of nitrous oxide and methane which make up a significant chunk of the sectorrsquos emissions Whilst many water firms look to recover as much energy as they can from the wastewater treatment process ndash namely through advanced anaerobic digestion and combined heat and power (CHP) ndash rolling out these technologies at scale and within the right timeframe can be a real challenge particularly as the cost of replacing infrastructure is so high and the existing wastewater treatment assets have been built to last

So between now and 2030 water firms across the country will need to have found a cost-effective means to decarbonise wastewater treatment facilities or at the very least offset all of their associated emissions (through peatland restoration and tree-planting for example) The answer will inevitable lie in increased RampD and collaboration across the industry to bring new technologies to a commercially viable stage as soon as possible

An aerial view of a sewage treatment plant in Swindon Photo urbanbuzz Shutterstockcom

6 edienetMission-PossibleAchieving net-zero carbon in UTILITIES

The next CfD tender is due to be held in 2021 with further auctions being held around every two years according to the Government

Meanwhile interconnectors which allow the UKrsquos power grid to export renewable energy or import it from a much larger geographic area ndash such as Norwayrsquos hydro power resources ndash will be a key catalyst in increasing the share of renewables in our energy mix further By 2030 National Grid will have at least six interconnectors operating in Britain through which 90 of electricity imported will be from zero-carbon sources Positive changes are happening at an industrial supply level

too ndash the growth in the Corporate Power Purchase Agreement (CPPA) market is a case in point delivering long-term cost and carbon reductions for corporate end-users and guaranteeing revenue streams for utilities companiesrsquo clean energy projects The recent signing of a 10-year CPPA between Northumbrian Water and Danish energy giant Oslashrsted stands out as the first direct supply deal between a business and a UK offshore wind farm This agreement also serves to highlight the appeal of the CPPA route to renewables for the utilities sector from both a lsquosupplierrsquo (Oslashrsted) and lsquoend-userrsquo (Northumbrian Water) perspective

(L-R) Chris Rayner Founder of C-Capture Drax Power CEO Andy Koss Caspar Schoolderman Director of Engineering at C-Capture and Carl Clayton Drax Research and Innovation Engineer at the Drax BECCS plant which has successfully captured carbon Photo Drax

In action

The water industryrsquos pledge to be net-zero carbon by 2030In April 2019 ndash months before the UK Governmentrsquos commitment to net-zero emissions by 2050 ndash the water sector in England voluntarily set a bold target to achieve net-zero carbon emissions by 2030 Under a new Public Interest Commitment coordinated by industry body Water UK the CEOs of all of the nationrsquos water suppliers agreed to the commitment sending out a strong signal across the UK economy

As part of the Commitment the water firms have since committed to planting 11 million trees which will effectively act as lsquocarbon sinksrsquo and improve the natural environment across 6000 hectares of English land Many water firms are now in the process of setting their own respective lsquonet-zerorsquo carbon targets in line with the new strategy Northumbrian Water leads the sector in this regard having already committed to become carbon neutral by 2027 by converting all sewage sludge into energy through anaerobic digestion improving energy efficiency and purchasing zero-carbon electricity

7 edienetMission-PossibleAchieving net-zero carbon in UTILITIES

But while renewable energy and energy efficiency are forecast to deliver the majority of emissions reductions through to mid-century there remains a raft of other emerging energy technologies and digital enablers that will need to play a part in the utilities sectorrsquos transition to net-zero carbon

One such technology is carbon capture and storage (CCS) which effectively removes CO2 from the exhaust gases of power plants and industrial facilities such as wastewater treatment works Whilst the technology is still in its relative infancy the UK Government last year provided research funding for a project which will capture around 200000 tonnes of CO2 from the St Fergus Gas Terminal in Aberdeenshire and transport it for storage to one of three depleted gas fields using existing pipelines ndash Ministers have said this project could be up and running in the next few years Meanwhile earlier this year Drax Power Station announced it had invested pound400000 into an innovative first-of-kind bioenergy carbon capture and storage (BECCS) pilot project which could enable the North Yorkshire-based firm to become the worldrsquos first lsquonegative emissionsrsquo power station as the system removes greenhouse gases from the atmosphere whilst electricity is being produced

Another significant shift expected to help the utilities sector on the road to net-zero is that of distributed generation ndash the creation of localised (ie decentralised) energy networks which combine renewables with lsquoflexiblersquo technologies such as battery storage systems allowing energy to be

lsquobankedrsquo when not generated but not needed and released when demand rises From a supplier perspective distributed generation places the traditional utility model (based on centralised supply) under real pressure and many firms are duly looking to adjust their business models and diversify their range of services particularly for energy-intensive business consumers From an lsquoend-userrsquo perspective distributed generation represents a significant opportunity and a growing number of utilities businesses are themselves investing in decentralised energy systems

Northumbrian Water for instance is installing battery storage units made using end-of-life electric vehicle (EV) batteries at several of its water treatment works in order to store power generated using its onsite renewable energy systems while Anglian Water installed its first lithium-ion battery at its water recycling centre in Cambridge in 2016 and is now in the process of installing a vanadium flow machine ndash a type of battery that can hold different levels of electrical charge

Must-read

The Smart Systems amp Flexibility PlanIn July 2017 the UK Government worked with its energy regulator Ofgem to develop the Smart systems and flexibility Plan ndash a 32-page document which details the work needed to manage an electricity system largely based on renewables The Plan which forms part of the Governmentrsquos Industrial Strategy outlines 29 actions that policymakers Ofgem and industry must take to scale-up smart technologies enable smart homes and businesses and improve access to energy markets for new technologies and business models

Ofgemrsquos 2018 progress update on the Plan revealed that 15 actions had been implemented and that it was ldquocommitted to delivering the remaining 14 by 2022rdquo Ofgem also identified nine related actions beyond those set out in the Plan that Government Ofgem or industry have committed to since its original publication You can read that progress update here

Action points

bull Define lsquonet-zerorsquo In simple terms lsquonet-zero carbonrsquo is your emissions minus the ones yoursquove removed equalling zero But being clear on exactly what is being measured on either side of that equation can be a challenge So spend some time working out exactly which emissions are being counted and why

bull Use the GHG Protocol as your bible As the worldrsquos most widely-used greenhouse gas accounting standards for companies the Greenhouse Gas (GHG) Protocol standards and guidelines provide a useful framework for monitoring measuring and reporting your progress towards net-zero

bull Build internal buy-in and focus on creating a lsquonet-zerorsquo culture Obtaining buy-in from your CEO and board is a crucial first step on the road to net-zero Once you have that shift the focus towards engagement across all teams ndash carbon reduction commitments wonrsquot be achieved at scale if they are left in the hands of the few

bull Bring the supply chain with you on the journey When it comes to realising lsquonet-zerorsquo an organisation can only achieve so much by itself Communicate your net-zero strategy clearly with your suppliers challenge them to join you on the journey and let them know that yoursquore open to new ideas and innovation on the road to net-zero

bull Measure your progress and shout about it After setting your net-zero target be clear on what success looks like over various stages of the journey ndash and remember to shout about milestones and successes internally to maintain a positive culture in the business

8 edienetMission-PossibleAchieving net-zero carbon in UTILITIES

ndash at another of its sites Supporting this shift to decentralised energy is demand-response ndash which incentivises end-users to reduce or eliminate non-essential energy usage at peak times For the utilities sector this growing market again represents an opportunity from both a lsquosupplierrsquo and an lsquoend-userrsquo perspective On the supply side all of the Big Six firms now offer demand-response services ndash or

have acquired demand-response aggregators ndash in a bid to offer better value to their customers And on the end-user side several water suppliers have seized the demand-response opportunity themselves United Utilities stands out among them having installed a lsquosmart boxrsquo at its sites which acts like a lsquovirtualrsquo power station allowing the firmrsquos process equipment to interact with the grid in a way that can even out

temporary peaks and troughs in demand

As the above examples serve to highlight achieving a state of net-zero carbon by 2050 if not sooner is possible for utilities businesses when it comes to energy generation and consumption ndash but only if the industry is supported by the right incentives frameworks and policies that provide the long-term certainty needed to unlock innovation l

ON THE SUPPLY SIDE ALL OF THE BIG SIX FIRMS NOW OFFER DEMAND-RESPONSE SERVICES OF THEIR OWN ndash OR HAVE ACQUIRED DEMAND-RESPONSE AGGREGATORS ndash IN A BID TO OFFER BETTER VALUE TO THEIR CUSTOMERS

1 BEIS 2018 UK Greenhouse Gas Emissions (Provisional Figures)

2 Eurostat People in the EU ndash Population Projections

3 BEIS Updated Energy and Emissions Projections 2018

4 National Grid Future Energy Scenarios

5 National Grid analysis of UK and European electricity markets

Achieving net-zero carbon in UTILITIES 9 edienetMission-Possible

The decarbonisation of Britainrsquos heating and gas networks ndash hundreds of thousands of

miles of pipes connecting millions of homes and businesses across the country ndash will prove

vital in the utilities sectorrsquos net-zero carbon transformation But progress in this area to date has been relatively slow and some significant changes will need to happen over the coming

few years to make this mission possible

NET-ZERO HEAT amp GAS

One to watch

Heating the North of England with hydrogenGas distributors Northern Gas Networks and Cadent have been working in partnership with global energy firm Equinor on H21 North of England ndash a project that aims to heat 37 million homes and 40000 businesses using hydrogen instead of natural gas

A report published by the partners in November 2018 suggests that converting the UK gas grid to hydrogen has the potential to reduce carbon emissions by over 258 million tonnes a year by 2050 The initial conversion project is touted to begin in 2028 and will be rolled out across Leeds Bradford Wakefield York Huddersfield Hull Liverpool Manchester Teesside and Newcastle over the following seven years A six-phase further UK rollout could then see 12 million more homes across the rest of the country converted to hydrogen by 2050

Clarence Dock Leeds ndash one of the cities being targeted for hydrogen heating over the coming decade

10 edienetMission-PossibleAchieving net-zero carbon in UTILITIES

When it comes to transforming the countryrsquos gas supply and heating systems there is no underestimating the scale of the challenge that lies ahead for utilities businesses Currently natural gas is used to heat around 80 of UK homes and 50 of businesses These heating requirements equate to around 40 of the UKrsquos energy consumption and create a quarter of the nationrsquos emissions In its net-zero carbon recommendations report the CCC claimed that the share of lsquolow-carbonrsquo heating systems ndash primarily heat pumps district heating networks and hydrogen-fuelled boilers ndash would need to increase from around 45 today to at least 90 for homes and 100 for businesses by the net-zero target year of 2050 Considering that more than 90 of todayrsquos homes will still be in use in 2050 a major nationwide retrofit programme will be required

at a rate of more than a million homes a year1 over the next few decades ndash a programme that the CCC estimates will come at an annual cost of up to pound15bn

In order to achieve this transformation the energy sector is in unanimous agreement that a clearer more joined up policy framework is needed to support them with the decarbonisation of heat over the next two decades

Currently action in this area is supported via the Renewable Heat Incentive (RHI) which provides financial incentives for homes and businesses to shift to lsquorenewablersquo heat sources (biomass and waste) However the RHI is due to close in 2021 leaving a crucial incentivisation gap which must be filled As such Energy UK is among those leading the calls for the creation of a new low-carbon heat strategy

In action

OVO Energyrsquos smart-enabled electric heatersBristol-based energy supplier OVO Energy last year unveiled a suite of new low-carbon products in an effort to accelerate the transition to the distributed domestic energy system of the future Supported by a new intelligence platform called VCharge the products include a domestic lsquovehicle-to-gridrsquo charger and the UKrsquos first smart-enabled electric heaters (pictured)

The heating solution called VCharge Dynamo is an internet-connected switch that can be retrofitted to electric storage heaters It effectively allows users to control the level of heat they want when they want it via a dedicated app OVO claims it can reduce electricity bills by as much as 30 whilst providing balancing services to the grid The VCharge Dynamo was recently discontinued however with OVO yet to announce further details about the product

Photo OVO Energy

One to watch

The UKrsquos 2020 Heat RoadmapIn December 2018 BEIS published its Transforming Heating overview document as part of its Clean Growth Strategy Within that document the Department pledged to publish ldquoa new roadmap for policy on heat decarbonisationrdquo within 18 months

Whilst full detail on what the Roadmap will include is yet to be revealed the document does say that the Government will consider the CCCrsquos recommendation on scaling up biogas and will take into account the impact of innovation demonstration and future support on the costs of transitioning to low-carbon heating

11 edienetMission-PossibleAchieving net-zero carbon in UTILITIES

The industry body believes such a strategy should introduce net-zero-carbon housing policies as part of a national energy efficiency campaign support the rollout of large-scale trials of low-carbon heat technologies and green gas solutions and allow for the integration of heat transport power and industry within the UKrsquos Industrial Strategy2

But policy is just one piece of the net-zero puzzle and there remains a significant opportunity for the utilities sector to take the lead when it comes to injecting green gas into the grid and scaling up low-carbon heating technologies On the former opportunity the use of hydrogen as a replacement for natural gas is seen as a

vital next step on the road to a net-zero carbon economy primarily due to the fact that hydrogen produces no CO2 when combusted The UKrsquos hydrogen production capacity will need to be of comparable size to the UKrsquos current fleet of gas-fired power stations by 2050 according to the CCC Crucially for energy suppliers this transition to hydrogen-based heating systems will not necessarily require a complete infrastructural overhaul as much of the countryrsquos existing andor soon-to-be-upgraded gas infrastructure could be utilised But the transition will require suppliers to ramp up production of hydrogen-ready boilers and in order to match supply with demand effective marketing and communications campaigns

will be needed to convince the UK public of the need to make the switch away from natural gas and invest in the new equipment

It should also be noted that the large-scale retrofit deployment of hydrogen across the UK will only be viable if done so with the simultaneous rollout of CCS infrastructure as the gas-reforming technologies required for the bulk production of hydrogen produce large volumes of carbon3 Hydrogen production also represents an opportunity for the water sector the energy-intensive wastewater treatment process creates highly toxic ammonia which is devastating to the

environment if discharged into the water courses But several studies have been carried out and trials are now underway to extract hydrogen from that ammonia during the wastewater treatment process Northumbrian Water is among those that have trialled a hydrogen Microbial Electrolysis cell (MEC) reactor on its wastewater treatment works which allows for hydrogen to be collected and re-used as a clean and valuable fuel4 With more than 9000 wastewater treatment works operating 247 across the country pioneering processes like this could significantly reduce the sectorrsquos emissions whilst helping to contribute to the new hydrogen economy5

In action

EONrsquos pound26m refit of the UKrsquos largest urban CCHP systemIn 2017 lsquoBig Sixrsquo energy supplier EON completed a three-year pound26m refurbishment of Citigen ndash a combined cooling heat and power (CCHP) project which generates electricity heat and chilled water distributed to individual developments through the largest underground pre-insulated district heat network in the City of London

The innovative tri-generation district energy project lays out more than 6km of heating and 45km of cooling networks from the Guildhall to the Barbican Centre providing heating and cooling for the equivalent of 11300 homes The recent refurbishment saw EON replace the plantrsquos two engines with smaller cleaner gas versions The facade of the Port of London Authority building in London behind

which sits EONrsquos Citigen tri-generation project Photo Alena Veasey

12 edienetMission-PossibleAchieving net-zero carbon in UTILITIES

By 2035 the CCC recommends that almost all replacement heating systems for existing homes must be low-carbon Energy suppliers will therefore need to turn to other technologies to reduce heating emissions and in several areas this transition is already being seen One such technology is electric heating using heat pumps By transferring heat from the ground or outside air into buildings heat pumps are able to operate at very high efficiency levels and they do not give off any emissions locally in the process Heat pumps can also be retrofitted around existing boilers meaning there is no need to remove or replace radiators Moreover heat pumps could be utilised alongside hydrogen boilers to provide back-up heat and meet peak demand on colder days Experts claim that the rollout of these so-called hybrid heat pumps

could eventually displace fossil fuel use in buildings6

Another exciting development now being turned to by energy firms is that of ldquosmartrdquo storage heating ndash units that can take advantage of off-peak electricity prices by releasing stored heat at pre-set times and temperatures which users can control via their smartphone This increased user control offered by smart storage heating systems can reduce energy required whilst the grid-balancing functionality can help to support the widespread adoption of renewable energy

And at a local level a growing number of utilities businesses are investing in or supporting the deployment of district heating systems or heat networks These systems connect up a wide range of heat sources ndash including the

likes of hydrogen electric heat pumps green gas waste heat and solar ndash via a network of insulated pipes for residential and commercial heating uses There are already more than 17000 district heating systems spread across the UK7 and the Government has suggested that they could account for at least 17 of heat demand in homes and almost a quarter in industrial and public-sector buildings by 20508

In summary it is clear that a more supportive regulatory framework is needed to address the multi-billion-pound funding gap to scale-up these green gas and low-carbon heat technologies over the coming years No single technology or system holds the ldquosilver bulletrdquo to achieve net-zero carbon heat in the UK but one thing is certain energy firms have a critical role to play in driving the

transformation Investing in andor trialling these low-carbon technologies now and engaging with domestic and commercial customers on the benefits of upgrading their heating equipment when required will ultimately be the difference between whether the CCCrsquos recommendations for low-carbon heating will be achieved or not Another important concluding point that can be taken from the CCCrsquos net-zero recommendations report is that ldquoenergy efficiency is the key precursor to low-carbon heatrdquo Thus in tandem to the scaling-up of carbon-reducing technologies and systems energy firms must maintain a relentless focus on supporting their customers ndash both domestic and commercial ndash with the rollout of energy efficiency measures if the sector is to help the UK achieve a state of net-zero carbon by 2050 l

1 National Energy Action (NEA) Heat Decarbonisation Report 2017

2 Energy UK Kick-starting the Decarbonisation of Heat Report 2018

3 The Institution of Engineering and Technology (IET) Transitioning to Hydrogen report 2019

4 Northumbrian Water Developing the Clean Fuel of the Future

5 Institution of Chemical Engineers (IChemE) WaterSIG30 project

6 Committee on Climate Change (CCC) Hydrogen in a Low-Carbon Economy Report 2018

7 Association for Decentralised Energy (ADE) Heat Networks in the UK Market Report 2018

8 BEIS Heat Networks Statistics 2018

Achieving net-zero carbon in UTILITIES 13 edienetMission-Possible

The shift away from internal combustion engines towards zero-emission vehicles revolution represents a radical change in the way we think about energy and transportation For the utilities sector this shift offers a golden opportunity to move beyond

simply supplying electricity and gas and begin providing a full range of energy services and solutions ndash taking the country a giant leap towards a net-zero carbon economy in the process

NET-ZERO TRANSPORT amp INFRASTRUCTURE

14 edienetMission-PossibleAchieving net-zero carbon in UTILITIES

When it comes to realising a net-zero carbon economy transport is arguably the most important industry of them all it remains the biggest single emitter of greenhouse gases in the country ahead of power and industry Thankfully an EV revolution is already well underway Following the Governmentrsquos announcement that sales of petrol and diesel cars and vans will be effectively banned by 2040 there has been a significant upsurge in consumer demand for electric alternatives Indeed almost three times as many EVs were registered in July 2019 than in the same month of 2018 whilst new diesel car registrations were down by 22 over the same period according to the Society of Motor Manufacturers and Traders (SMMT)

As automotive manufacturers scramble to release new and more affordable zero-emission models the SMMT estimates that battery EVs will double their market share next year with 51000 registrations predicted for 2020 However this would still represent just 22 of the overall car sales Clearly for the UK to meet its net-zero carbon ambitions the EV transition will need to pick up some real pace over the coming few years

As for the role of the utilities sector in enabling this transition some parallels can be drawn to the shift towards low-carbon energy systems covered earlier in this report With the right policy incentives utilities businesses can power the emerging mobility ecosystem whilst diversifying their offerings and increasing value for their customers and shareholders Additionally utilities businesses can be shown to

lead the way as commercial lsquoend-usersrsquo of vehicles when it comes to increasing the uptake of EVs by switching to all-electric fleets themselves

On the latter point the industry has already made some great strides In the energy sector for example EDF Energy last year made its own Mission Possible Pledge committing to fully electrify its fleet of around 1500 vehicles by 2030 ndash a move which the firm says will save up to 62 tonnes of CO2 a year Fellow French firm Engie also submitted a Mission Possible Pledge of its own committing to 20 of its fleet being fully electric by 2020 As part of that pledge Engie said it would introduce 395 EVs across the business and invest more than pound600000 into charging infrastructure at its offices customers sites and employee homes And more recently Big Six firms Centrica and SSE joined the charge by committing to total fleet electrification by 2030 through The Climate Grouprsquos RE100 programme

Similar high-level ambition is being seen in the water sector which has committed to be net-zero carbon by 2030 as outlined earlier in this report United Utilities is leading the way having last year committed to switch its entire fleet of vehicles from diesel to home-produced energy within the next 10 years ndash a plan that if successful would reduce the firmrsquos annual diesel consumption from four million litres to zero Anglian Water Northumbrian Water and Yorkshire Water are among a raft of other businesses in the sector that have made EV commitments of their own with the trio all recently deploying Nissan e-NV200

electric vans as an important step on their respective green fleet journeys

However beyond light-duty vehicles a key challenge for the sector lies in the decarbonisation of HGVs ndash vehicles that contribute a large chunk of the utilities sectorrsquos current transport emissions but for which a cost-effective solution is much less clear1 While electric and hydrogen-powered HGV options are emerging as viable alternatives to diesel a recent report from the Energy Technologies Institute (ETI) concluded that the transition to zero-emission HGVs may require gas-electric plug-in hybrid vehicles as a bridging solution whilst fully zero CO2 tailpipe emissions options are developed

The ETI also noted that the switch to hydrogen-powered HGVs would require large volumes of hydrogen such that CCUS technologies would need to be developed in tandem As well as leading the way from a commercial end-user perspective the utilities sector has a huge role to play in the EV transition as a supplier of the necessary power and infrastructure to support it One such area is the scaling up of charging infrastructure There are now almost 10000 public EV charging locations across the country ndash more in fact than the number of petrol stations Of course the growing number of EV charging points creates something of a windfall for energy suppliers due to the resulting increased demand for electricity as a lsquofuelrsquo

Must-read

THE UK Governmentrsquos lsquoRoad to Zerorsquo Transport StrategyLaunched as part of its Industrial Strategy in July 2018 the Road to Zero Strategy outlines the Governmentrsquos long-term vision for zero-emission road transport by 2040 The Strategy sets out the ambition for at least 50 ndash and as many as 70 ndash of new car sales to be ultra-low emission by 2030 alongside up to 40 of new vans

Over 147 pages the Strategy details a raft of major new funding programmes including pound400m being put towards a Charging Infrastructure Investment Fund a pound40 million programme to develop and trial innovative low-cost wireless and on-street charging technology and up to pound500 for individual EV owners to install a charge point in their home

The Government stresses that the Road to Zero Strategy is ldquotechnology-neutralrdquo and does not speculate on which technologies might help to deliver its 2040 mission You can read the full Strategy here

In Action

ScottishPowerrsquos award-winning transport behaviour change strategyEarlier this year ScottishPower picked up one of ediersquos coveted 2019 Sustainability Leaders Awards for its work in the area of Employee Engagement amp Behaviour Change The companyrsquos entry centred on staff engagement around transport after it rolled out a raft of solutions in its bid to achieve carbon-neutral status by 2050

Specifically ScottishPower rolled out a new web-based platform to enable its international employees to work collaboratively without the need to travel and a Sustainable Travel Guide was developed to allow staff members to make more informed choices about their travel options ndash including a section on EVs In addition the firm offered programmes workshops and driver training to staff who wanted to purchase an EV for personal use with pound4000 being provided as an interest-free loan and an additional pound6000 offered as an advertising grant to incentivise EV uptake You can view the full award-winning case study here

(L-R) Presenter Chris Large partner Global Action Plan ScottishPowerrsquos Craig Bradley and compere Michaela Strachan at ediersquos 2019 Sustainability Leaders Awards

15 edienetMission-PossibleAchieving net-zero carbon in UTILITIES

But with this increased demand comes two major challenges first local authorities will struggle to keep pace with the number of EVs on the road when it comes to providing adequate charging points and even if this infrastructure is scaled up at the required rate the electricity grid will simply not be able to cope if everyone chooses to charge their vehicles at the same time

But behind both of these challenges lie some exciting new business model

opportunities for the power sector First a growing number of energy suppliers are eying an emerging opportunity in developing and operating this much-needed charging infrastructure themselves Gloucestershire-based green energy supplier Ecotricity blazed the trail in this regard having made its first foray into EV charging in 2012 the firmrsquos Electric Highway network now has more than 300 charging points across the UK More recently a number of the larger energy suppliers have jumped on the EV charging

bandwagon French firm EDF is chief among them in Europe having publicly announced its vision to achieve a 30 market share in EV charging in France Belgium Italy and the UK by 2022 Meanwhile Oslashrsted has invested in US-based Volta Charging Engie has put money into Belgian charging operator PowerDale and Centrica has backed Israeli EV software charging firm Driivz ndash to name but a few of the moves into EV charging from other major players across the utilities space

BY COMBINING SMART CHARGING SOLUTIONS WITH SMART METERS IN THE HOME ENERGY SUPPLIERS CAN MORE TAILORED TARIFFS TO THEIR CUSTOMERS WHILST ENGAGING WITH THEM MORE CLOSELY ON THEIR ENERGY USAGE

In Action

UK Power Networks smart charging marketplaceUp to 1000 EV owners are being offered financial incentives to charge their vehicles during off-peak hours under a new service being trialled by UK Power Networks

The service called Shift sees the power company work with energy supplier Octopus Energy intelligent energy platform Kaluza and charge point operator Pod Point for the solution which helps to balance the electricity grid as more EV charge points come online

The trial aims to develop a large-scale smart charging solution that can be rolled out nationwide by flexibility service providers such as charge point operators aggregators and energy suppliers You can read more details about this trial here

Spotlight on

Vehicle-to-grid (V2G) technologyVehicle-to-grid (V2G) technology effectively allows EVs to become lsquobatteriesrsquo and store electricity to be fed back into the national grid to help supply energy at times of peak demand The technology sees an EV discharge its batteries via a separate charging unit back to the grid Energy providers can incentivise EV owners with a small fee to do this (per kWh) The price difference between that fee and the cost of recharging the EV during off-peak hours would be the profit that the EV owner could make by utilising V2G-based charging

As more EVs are added to UK roads V2G could become a crucial technology in ensuring that the national electricity network remains balanced despite thousands of EV owners needing to charge their cars

A number of energy suppliers have already made moves into the V2G market In 2017 for instance OVO Energy partnered up with Nissan for a V2G offering which the energy firm claimed could save its customers up to pound305 on their annual energy bill Meanwhile last year a consortium of firms including Octopus Energy Octopus Electric Vehicles UK Power Networks ChargePoint Services Open Energi Energy Saving Trust and Navigant was granted pound3m of government funding to begin the first large-scale UK domestic trial of V2G technology

16 edienetMission-PossibleAchieving net-zero carbon in UTILITIES

A second interconnected business model opportunity for utilities firms is in the creation of lsquoone-stop-shoprsquo bundled energy services for EV owners Medium-sized supplier OVO Energy led the way in 2017 by launching EV Everywhere ndash a service which bundled 100 renewable household energy with free membership to an already established network of more than 5000 charge points throughout the country operated by Chargemaster

Big Six firms EON and ScottishPower have also diversified their offerings by offering bespoke tariffs for EV owners which provide discounted car charging rates during off peak hours The latter examples of business model diversification represent a particularly game-changing opportunity for the utilities sector to drive the net-zero carbon economy By financially incentivising EV owners to charge their cars overnight ndash when energy demand is usually at its lowest ndash energy

suppliers can balance demand on the grid thus ensuring that a nation full of EVs is feasible from a supply-demand perspective without the need for additional electricity network infrastructure This will also help to support the aims of the UKrsquos smart meter rollout as by combining smart charging solutions with smart meters in the home energy suppliers can offer more tailored tariffs to their customers whilst engaging with them more closely on their energy usage In summary by educating and incentivising consumers to make the switch to EVs building and supporting the rollout of charging infrastructure and innovatively managing the subsequent demand on the electricity grid the utilities sector can play a vital role in supporting the UKrsquos transport sector on the road to net-zero emissions l

1 Committee on Climate Change (CCC) Zero Emission HGV Infrastructure Requirements report 2019

Achieving net-zero carbon in UTILITIES 17 edienetMission-Possible

Water utilities are very energy-intensive businesses They require large amounts of power to move water around

their networks and operate water and wastewater treatment plants to provide clean water to customers and process

sewage safely back into the environment

INDUSTRY VIEWPOINT ACHIEVING WATER SECURITY THROUGH

A RESILIENT ENERGY NETWORK

18 edienetMission-PossibleAchieving net-zero carbon in UTILITIES

Energy usage makes up a large proportion of a water utilityrsquos costs It is imperative that these utilities understand their energy related costs not just their consumption bills but the sustainability costs the infrastructure maintenance costs and the customer experience costs as well as how these costs affect their operational and capital expenditure

While focus is often on energy bills the biggest costs and opportunities for water utilities lie in the efficient operation and maintenance of electricity infrastructure to ensure delivery of their regulatory obligations

Electricity resilience is crucial to the delivery of water to customers and protecting the environment The consequences of the failure of high voltage electrical equipment and power outages are far more significant than just losing power

Power failures can result in untreated wastewater entering the environment which can have a devastating effect on the local ecosystem and the local community Serious pollution incidents in the UK were up 75 in 2018 (56 incidents) A number of recent incidents meant water utilities had to pay fines worth millions of pounds Failures can also affect water pressure and interrupt supply throughout the water network leaving residential and business customers without water supply for extended periods

Active management of electricity infrastructure assets is the best way to build resilience and reduce costs In spite of their importance many water utilities still donrsquot know how to manage their electricity assets effectively When working with our clients we focus on increasing the productivity of their electricity assets reducing their energy infrastructure costs

decarbonising their electricity infrastructure and enabling them to realise their electricity infrastructure as a strategic asset One of the first things we do is support our clients to establish a comprehensive understanding of their assets This information is crucial to developing an effective asset maintenance strategy

An optimised asset maintenance strategy enables water utilities to pre-empt problems and balance their asset replacement and maintenance cycles so they donrsquot have unexpected maintenance work and cost peaks This advanced planning will also optimise their asset lifecycle which can prolong the life of their assets by years reducing replacement costs and wastage

An optimised strategy also plans for the best use of system technology for early detection of faults and weaknesses These are critical to identifying and preventing serious issues like partial discharge which can lead to catastrophic system failure

Smoothing the peak of energy consumption and reducing network failures leads to better commercial outcomes Additional benefits include a reduction of total expenditure increased regulatory compliance lower risk improved customer satisfaction and of course a more sustainable business with fewer environmental incidents

We support our clients to take a long-term approach to optimise their electricity infrastructure and ultimately deliver their commercial and sustainability ambitions Considering a strategic approach to managing their electricity assets now ensures they can easily adapt their strategy as further innovation opportunities emerge and their business requirements change l

SAIDI GBADAMOSICLIENT RELATIONSHIP MANAGERUK Power Networks ServicesContact UK Power Networks Servicesenquiriesukpowernetworkscoukukpowernetworksservicescouk wwwlinkedincomcompanyuk-power-networks-services