Workshop one: flexible consumers
Stakeholders were asked to consider a range of challenges facing the energy networks, Ofgem, the Scottish Government and the UK Government. While it was noted that there is commitment to put consumers at the heart of decisions about the energy system, there are a number of challenges which need to be addressed. For example, connecting renewable generation and developing electrified heat and transport can all increase costs – something that disproportionately affects those in fuel poverty and those not on the gas network, who pay higher prices for their energy. Stakeholders were asked to consider the principles upon which decisions should be made about the future of the networks, along with the challenges and opportunities, before putting forward a series of recommendations.
The main challenges cited by stakeholders related to a lack of knowledge of flexibility services on the part of most consumers, coupled with a lack of incentive for them to change the way they consume energy. Stakeholders felt that the Scottish Government could lead the way by promoting flexibility services and by educating customers on the benefits. Scotland was thought to be well placed to take advantage of the rise in consumer flexibility and its opportunities, including lower bills for consumers. Greater use of flexibility services would help reduce costs for major energy users and lead to increased employment opportunities for workers.
The Scottish Government was thought to have a clear role in influencing Ofgem and the UK Government to ensure that appropriate regulations are in place to deliver benefits for all consumers. Stakeholders believed that the move towards greater flexibility required intervention and should not just be left to the market.
Many argued for more collaboration between all relevant actors in this area, and it was felt that suppliers, planners, energy networks, and the regulator all had significant roles to play. Greater leadership at all tiers of government, including local authorities, was thought essential to support the move towards greater flexibility, and to ensure that these services are included in the planning of new housing and commercial developments.
Workshop two: decarbonisation of heat in buildings
The workshops explained how decarbonising the energy demand in buildings, and in particular the technologies used for heating, represents one of the biggest challenges in decarbonising our energy system. Stakeholders were told that the electricity networks already provide low carbon energy and, in combination with heat pumps and modern, smart electricity heaters, electricity networks can increasingly supply energy for heat. However, there will need to be a substantial upgrade to the electricity networks to accommodate this new demand.
Attendees were asked to consider options to repurpose the gas networks – for example, by blending low carbon gases with natural gas, or by fully replacing natural gas with gases such as biomethane or low carbon hydrogen. Unlike the option of electrification, decarbonising a building through repurposing gas networks cannot be done individually but needs to be part of a larger coordinated scheme which converts all the buildings supplied by a particular network. After the presentation, the groups were asked to cite the challenges and opportunities associated with the decarbonisation of heat in buildings.
Insufficient network capacity was thought to present a real challenge, as was the comparatively cheap price of gas which means that consumers and developers are understandably reluctant to change to low carbon sources to heat buildings, given the cost and considerable disruption. A lack of stringency in building regulations and a lack of certainty around the future role of gas were thought to make this more challenging.
Attendees also discussed the opportunities associated with decarbonising heat in buildings, such as the potential to reduce and balance demand. Decarbonising heat could also provide an opportunity for farmers and landowners to explore new revenue streams, such as the development of biogas plants, and for engineers to build on their skills. Exploring hydrogen as a source of heat for buildings could, in due course, provide both a low carbon and a low cost option, which would benefit customers, including those living in fuel poverty. Stakeholders felt that collaboration, consumer engagement, cross-sector planning and information sharing were critical for the future of the decarbonisation of heat and that a long-term strategy should be set out to remove uncertainty.
Workshop three: local and community energy
Local energy schemes have the potential to support the efficient development of electricity networks by balancing supply and demand within network constraints, which can be particularly valuable where there is a peak in demand for a relatively short amount of time. Scotland has been successful in connecting community and locally owned electricity generation schemes to the networks funded through Feed-in Tariffs, a support mechanism which is no longer available. This means that it is difficult for local energy schemes today to develop a business case.
Stakeholders were told how a number of schemes have been established in the past few years using biomethane and that, in the future, there is the potential to use green hydrogen from renewable generators. Stakeholders were also told that larger forms of transport could be powered by low carbon gases, in particular hydrogen, delivered via gas networks. On decarbonising transport more generally, the session touched on a role for the Scottish Government in educating and informing consumers while continuing to influence the UK Government and regulator on the need to spread the benefits across all consumers.
The complex nature of establishing community energy projects was seen as a real challenge for communities wishing to connect, with the removal of subsidies, including the Feed-in Tariff, being a clear barrier as it reduced the incentives for communities to participate. However, attendees felt that local and community energy had the potential to deliver a range of benefits, from financial and social benefits for communities to increased flexibility for energy networks.
There were calls for dnos to become more familiar with local needs and to help enable community energy schemes, while local authorities were invited to take a more active role in supporting community energy. There was a role identified for the regulator to review network charging in order to incentivise communities wishing to participate in local community energy schemes.
Workshop four: transport decarbonisation
Electrification of transport will play a critical role in meeting climate goals and reducing local air pollution and its associated health effects. Scotland has set out a bold ambition to phase out the need for new petrol and diesel cars and vans by 2032, eight years ahead of the rest of the UK. Moving from EV early adopter to a mass market poses challenges for the planning and operation of the Scottish electricity networks as reducing emissions from the electrification of transport will likely increase the demand and applications for connection to the electricity distribution network. Decarbonising transport is a challenge as we need to ensure that the electricity network is able to support the increased demand and that we have the EV charging network in place to accommodate and support a decarbonised transport system.
Stakeholders were also asked to consider other parts of the transport challenge, namely buses, hgvs, trains and ferries, as well as the possibility that larger forms of transport could be powered by low carbon gases, in particular hydrogen, delivered via gas networks. It was felt that the Scottish Government should work to educate and inform consumers of the benefits of the transition to a decarbonised transport and that it should seek to influence the UK Government and the regulator to ensure that the electrification of transport will align with a just transition.
Workshop five: decarbonising industry
This session heard that there will need to be closer cooperation between network companies and industrial energy users to make significant advances in decarbonising industry, and that there are opportunities for growing potential revenue streams and cost reductions associated with a flexible approach to energy demand. Aligning electricity demand with market signals will become more valuable, as will the ability to adjust demand (or on-site generation) at short notice, for example in response to faults.
The opportunity for decarbonising the gas network could involve changes to the mix of gases, or even the delivery of pure hydrogen from low carbon sources. The discussion considered the potential challenge for some businesses presented by the intermittent nature and geographic location of many sources of clean energy. However, certain blue-chip companies, as well as the food and drink industry in Scotland, would be particularly well placed to take advantage of decarbonisation and it was suggested that certain industries should set up hubs close to sources of generation.
The point was also made by some that the perceived uncertainty in terms of UK Government policy and the tendency of many shareholder-owned business to prioritise short-term objectives, and profit, over long-term (10 year plus) outcomes, were challenges that should be overcome. The Scottish Government should take a leading role by encouraging a whole system approach to the decarbonisation of industry by funding pilot projects, including those involving hydrogen grids, to produce a road map for the decarbonisation of industry. Some also argued that the Scottish Government should seek to influence the regulator to provide incentives for businesses to decarbonise.
Workshop six: energy production – renewable electricity and green gas
Stakeholders were told that network costs include connection charges and system charges, both of which are changing, particularly in the case of electricity. The costs of connecting to the network are higher in Scotland than elsewhere in the UK, and there have been major changes to how distribution connected generators are paid. Meanwhile, there are strict limits defining the characteristics of the gas that is allowed to flow through the networks, which is a potential barrier to the introduction of more low carbon gases, particularly hydrogen.
Stakeholders identified a number of challenges, including uncertainty over policy and legislation as well as technical issues such as conversion, storage and transmission. They felt that more should be done to overcome the barriers presented by consumers not wishing to change their behaviours or pay more for renewable energy.
Rolling out renewable electricity and green gas in energy production in Scotland was seen to have far-reaching benefits for many elements of society. It was felt that this could lead to greater autonomy and sustainability for local communities and that it could increase job opportunities – something that is particularly important for an economy which is heavily dependent on the oil and conventional gas sector.
It was commented that there is a growing range of potential revenue streams for energy producers, with generators now able to gain revenue from being flexible, matching supply to demand, and providing technical services needed to meet increasing demand.