I was tempted to write one of those humourous Christmas blogs like “how much energy has been saved by switching to LED Christmas lights” or “how much energy does Santas sleigh use” but in the end decided to finish my first year of blogging with something more serious – my Christmas wish list.

All I really want for Christmas (apart from my Amazon wish list), is a sensible and honest energy policy for the UK.

What might such a policy look like?

First of all energy policy has to openly address the interlinked set of problems we are facing: rapidly declining continental shelf oil and gas production, worsening energy security, shrinking electricity supply margin, the need to invest in new generating and transmission systems, increasing energy prices and lack of consumer trust in energy companies, the cost and intermittent nature of renewables, the high cost of nuclear, and the fact that the electricity regulation framework is no longer fit for purpose for the new energy world.  Political and corporate leaders need to unequivocally acknowledge the problems and realistically assess the options for mitigating them.

Political leaders should understand and explicitly say that energy efficiency is one of the best (cheapest, cleanest and fastest to deploy) and largest energy resources we have. This isn’t about saying blah blah blah blah about energy supply and then adding some nice words like “and of course we should not forget energy efficiency“.  They should recognise the facts that over the last forty years energy efficiency has delivered more energy services than any other source of energy.

Then we need to enact the following policies.

• It should be mandatory that every time someone proposes building new energy supply facilities – of whatever technology – they should have to explicitly and independently assess options to improve efficiency, comparing returns, risks and delivery times.

• The regulatory framework should be changed to incentivise Distribution Network Operators to evaluate demand side measures as an alternative to expanding supply options and require them to invest in the demand side option if it has equal or better returns.

• Electricity generation should be separated from energy supply.

• The smart meter programme should be refocused on improving the metering of the distribution system.  Smart meters are an important piece of infrastructure but in its current form the roll-out of residential meters does not have a value proposition for the consumer.

• All subsidies and tax breaks for the development and deployment all types of energy should be phased out in no more than ten years.  A step-down schedule for each subsidy and tax break should be announced and stuck to.

• There should be a doubling in R&D in energy technologies and private sector R&D should be encouraged by favourable tax treatment.

• Require all buildings to display Display Energy Certificates.

• Require all commercial building owners to make their energy use publicly available on-line.

• Require firms to report on energy efficiency opportunities identified by ESOS scheme surveys.

• The various schemes such as CRC, ESOS etc should be radically simplified so that energy managers can concentrate more time on developing projects and less on completing forms for government.

• Require suppliers to government to have ISO50001.

• The government should show leadership by launching a series of large-scale, multi-premise Energy Performance Contracts (EPCs) covering multiple central government buildings and facilities across geographical regions.  Funding could either be on the public budget or from private sources – the conditions would be that the deals are cash flow positive, utilise integrative design techniques, guaranteed by credible Energy Service Companies and have independent Measurement and Verification.  The results and the contracts should be available on-line to encourage greater use of EPC in the public sector.

Well, we can all dream about what we want for Christmas!

By the way, I was still wondering how much energy converting all our Christmas tree lights to LEDs would, or perhaps already has, saved.  By my calculations, if used universally on the UK’s 7 million domestic Christmas trees LEDs would reduce load by about 260MW and save about 29,000MWh of electricity compared to old fashioned fairy lights, with a value to consumers of c.£4m.  And as for the energy used by Santa’s sleigh the answer is clearly a very big number.

Merry Christmas and have a healthy, happy and successful energy efficient New Year.

Back in October I introduced the idea of the Energy Efficiency Cool Wall to illustrate one of the problems with energy efficiency – the fact that it is generally a dull and boring subject.  One element of growing the market for energy efficiency is to develop products and services that appeal to consumers – that are “cool”.  Good examples include the NEST thermostat (before NEST who would have thought you could have a cool thermostat) and the Philips Hue lighting system.

Here is the video from the keynote speech at the Smart Building Conference.

I come back to my theme of how to massively scale up energy efficiency with the perspective of thrity years involvement in the field – during which I have worked at the operational level designing and deploying multi-premise programmes, the strategic level developing innovative energy outsourcing and financing deals, the policy level advising UK and other governments.  First of all the good news – I am positive that energy efficiency is finally being recognised for what it is, the cheapest, cleanest and fastest energy resource we have for providing essential services.  This is true in the UK and many countries around the world – in North America, Europe, Asia, Africa and the Middle East the importance of efficiency is now being recognised. The problem is however, to use the language of fossil fuels, recognising a resource, turning it into a usable reserve and then exploiting that reserve profitably are all very different things.

It is not widely recognised that over the last thirty to forty years, improved efficiency has provided more energy services than all other energy resources put together and we did that without really trying except for a period between roughly 1975 and 1985.  The rest of the time we forgot about energy efficiency and yet it still provided more energy services than any other resource.  Just imagine what we can do if we really put our mind to it.  We live in a global society which only manages to turn eleven per cent of all the primary energy resources we use, the coal, the oil, the gas, the nuclear, the solar, the hydro, the wind and the biomass, into usable energy services that we need and want, the warmth, the process heat, the cold, the motive power, the light and the sound.  Eight nine per cent is wasted.  Even allowing for the fundamental limits set by thermodynamics this is pretty pathetic for a so-called advanced technological society.

Everywhere we look we are seeing concerted efforts to improve energy efficiency in new products, in industry, in the home, in electrical devices, in cars, in IT, in lighting, in ships and in aeroplanes – as well as to develop retrofit solutions.  Whereas energy efficiency has never been a design criteria in the past it is increasingly so and all the millions of improvements in efficiency that come from devices as diverse as mobile phone chargers to giant ship engines will have an increasing effect on overall efficiency levels as they become adopted, normalised and regulated in to the economy.  I am sure that most long-run energy forecasts don’t take sufficient account of these developments which for the first time, in developed countries at least, are starting to decouple growth in income (GDP) and growth in energy use.

However, even now senior managements in many organisations (and most governments and political parties) are still not taking energy efficiency seriously enough and we are not making enough progress in the short-term.  The message needs to go out that investing in energy efficiency is a low risk, high return deal that brings with it numerous quantifiable benefits over and above just cost saving.  On a national level it could bring huge benefits in terms of increased security of supply – helping to reduce the UK’s £24 billion (and growing) trade deficit in energy.  The strategic importance of energy, and the risks associated with it in a world facing increasing supply constraints as demand rises from a larger and wealthier global population, need to be recognised and acted upon at board level in all organisations, big and small, whatever their energy intensity or energy spend as a proportion of total costs.  We know from decades of experience amongst the global leading organisations that when top management lead on this issue, and appropriate management systems are set up, the energy efficiency reserves can be profitably mined for year after year, decade after decade.  We know how to do this.

We are seeing increased interest and investment in energy efficiency but what we are not doing at the moment is making large-scale investments in energy efficiency across large portfolios of existing buildings and facilities – despite the fact that are massive economic opportunities.  Many organisations with hundreds or even thousands of sites and large energy bills are making pilot investments, saving twenty to twenty five per cent or more on their energy spend, rolling out the technologies to ten or twenty sites and then stopping.  This is down to several factors on the demand side including the fact that we don’t have enough senior leaders (private sector, public sector and national politicians) who are demanding – and I do mean demanding – large-scale programmes.  We need more informed leaders who understand the opportunity and can “bang the table” to demand mass roll-out, large scale programmes using integrated design techniques and state-of-the-art technologies to maximize savings.  To get there we need more and better communication and capacity building at the top level.  Energy – despite its strategic importance – is still often dealt with at an operational level and constrained by capital budgets which of course favour offensive spending on new products, processes or markets.  On the supply side there is a shortage of project developers that use state-of-the-art technologies and integrated design and perhaps more importantly, can develop large-scale multi-site, and even multi-customer projects.  There is both a skills gap and a serious equity gap in the project development stage of the process.

The financing of energy services, energy performance contracts (EPC) and shared savings is often seen as the holy grail of energy efficiency.  This area is witnessing a boom but it is more a boom of interest rather than deals. As a speaker said at an energy efficiency financing conference, the ratio of conferences to deals is getting better but it is too high.  Many new entrants to the energy efficiency arena have suddenly discovered “shared savings” as a panacea without really understanding the issues.  Why should this apparent win-win proposition be so hard to make happen?  Firstly there is a lack of demand which is caused by a combination of ignorance, fear that savings won’t be produced, very high transaction costs and the fundamental truth that the traditional EPC is not that good a deal, and not even viable in much of the private sector.  A lot of complexity, a long-term deal and a small slice of savings over many years is not that attractive.  Furthermore EPCs don’t really work in the private sector – particularly commercial offices.  Secondly there are supply issues, many project developers (Energy Service Companies – ESCOs) are still developing projects in the old way with relatively small savings instead of holistic, high savings projects.  We need more innovation on the supply side.

On the supply of money, most of the money trying to finance these deals at the moment is high cost money seeking almost private equity returns.  Massively scaling up energy efficiency investment won’t be done by the kind of funding that is currently available.  We need to get the right structures to provide customers with real up-front benefits and secure cash flow streams that can provide sufficient scale and be attractive to the debt capital markets.  Traditional EPCs are not the answer to every problem.  Appropriate investors are keen to move into energy efficiency but their confidence in the processes and savings need to be built, something that is being helped by the wider adoption of Measurement and Verification (M&V) through the International Performance Measurement and Verification Protocol (IPMVP), standards such as ISO50001, and standardized protocols through the Investor Confidence Project (ICP) in the United States.  All of these need to be encouraged in the UK and indeed in all markets.

At the policy level energy efficiency is still the poor cousin, the Cinderella of energy policy.  This is true in the UK despite sterling efforts from some individual ministers. In February we had David Cameron launching the “energy efficiency mission” and extolling the virtues of improved efficiency (in a speech that in an Orwellian manoeuvre never made it to the Number 10 or DECC websites) and in December we have seen the ECO programme disrupted – effectively at the behest of the energy suppliers – and most of this short-term, politically driven change is occurring because another politician made an undeliverable, economically illiterate promise for his short-term gain.  Energy is an industry that demands long-term vision and leadership to find it’s way through the massive, structural changes it is facing.  In all the noise about energy prices the real potential of the energy efficiency resource, and how we move it from a resource to a reserve to exploitation, has scarcely been mentioned.  The furore over prices was (and still is) an opportunity to reform the energy supply market, make it more transparent, recognise the huge impacts of distributed generation, and once and for all put efficiency at the centre of policy.

We need a regulatory regime that fosters innovation in the energy supply and services models rather than just encourages more investment in energy supply, both in generation and distribution.  We also need to move energy efficiency out of the regulation, compliance mentality where it has always sat.  We need to radically overhaul the plethora of programmes such as CRC, EU ETS, DECs, EPCs and the forthcoming ESOS (Energy Savings Opportunity Scheme – a.k.a. mandatory surveys) to ensure that energy managers can spend their time really developing and implementing projects and not just reporting on their energy use in several different formats.  We need to make energy efficiency a market commodity just like coal, oil or gas by standardising procedures, measurement of savings and financing structures.  Again, we know how to do this through programmes like ISO50001, IPMVP and the Investor Confidence Project.  We just need to apply them and this needs leadership.

If we can develop and finance the large scale energy efficiency programmes we know are possible, and sort out the policy mess, we can move efficiency from being a resource – the equivalent of the resources of the North Sea of the early 1960s – into an energy reserve that can be exploited to provide massive economic benefits on the scale of the North Sea and larger – only unlike the North Sea the benefits from massive investment in energy efficiency will be permanent.

This post also appears on 2Degrees Network

You don’t have to spend much time looking into the energy scene, particularly around renewables, to find a statement to the effect that “energy storage is the key”.   Of course, what is actually meant is that the increasing use of renewables such as wind power, will make storage of electricity more important as a way of counteracting the fact that renewables are intermittent in output and may not produce electricity when it is needed.  This has become one of those energy truisms that gets trotted out regularly along with “you can’t store electricity”, which is rather odd when we all use a plethora of electricity storage devices (batteries) everyday.  What we really mean is that you can’t store electricity as electricity, it has to be stored in some other way – in the chemistry of a battery, the potential energy of a pumped hydro power station, the kinetic energy of a fly wheel, compressed air in a tank, or some other medium.  In fact even that statement isn’t correct as we can store electricity directly in a super-conducting coil which has no electrical resistance, commercial superconducting machines are available and find niche applications.

The electricity storage options most talked about are; pumped hydro power stations, (I remember visiting Ffestiniog pumped hydro scheme aged 10 or 11 – perhaps one of the sources of my interest in energy), flywheels, batteries of all types of course, compressed air, capacitors and super-capacitors, flow batteries and superconducting devices.   Each has a range of power rating – varying from kW to GW – discharge times (seconds to hours), efficiencies, capital costs, stage of technology development and ease of deployment.  But one of the most interesting energy storage technologies that until recently got very little attention is liquid air.  Highview Power (http://highview-power.com/wordpress/) have been running a grid-connected unit next to the SSE power station in Slough for more than 18 months.  As well as storage applications the technology can be used for waste heat to power (what I call WHP) applications and combined cold and power (CCP as opposed to CHP?).   WHP using various technologies is a major opportunity and a large resource that is currently largely being ignored.

As well as energy storage, liquid air technologies can also address two other important and valuable applications:

–       providing a fast-refueling and low-carbon transport fuel that is zero-emission at the point of use

–       harvesting low-grade waste heat.

In fact, just as people used to talk a lot about the “hydrogen economy”, it is possible to think about a liquid air economy.  Environmental and economic benefits can be increased by integrating liquid air technologies across the electricity, gas, transport and industrial sectors.  Unlike the hydrogen economy, which has been a dream since Jules Verne wrote about it in the 1870s – and in my opinion is likely to remain a dream, the technology required for a liquid air economy is a lot closer to existing (indeed much of it exists already), the engineering problems are easier to solve, and the new infrastructure deployment required is much less daunting.

Dearman Engines (http://www.dearmanengine.com), which is out of the same stable as Highview, is developing a liquid air engine and with partners including MIRA, Air Products and Loughborough University and has won a grant from the Technology Strategy Board to build and test an engine fitted into a commercial vehicle.  This will be a refrigerated truck with the Dearman engine providing cooling and power, it will be the world’s first liquid air commercial vehicle.

Although, as has been acknowledged by the Centre for Low Carbon Futures in an October 2013 report, “Liquid air technologies – a guide to the potential”, liquid air technologies are not a “silver bullet” they do have a number of advantages including utilizing existing components and supply chains.  This alone makes them worthy of further research – and it now seems as if that research is gearing up.  The University of Birmingham has won a £6m grant to create the Birmingham Centre for Cryogenic Energy Storage.  (Always good to see my Alma Mater doing pioneering work!).

Liquid air is one of those technologies that has long been neglected but thanks to the pioneering and world leading work of Dearman, Highview and their partners, is now starting to make real advances towards commerciality.  As well as the clear technical advantages it has a real appeal in its circularity and conceptual simplicity (although of course turning concepts into real engineering and economically viable products is never simple).  Although there can never be a single silver bullet solution to our energy problems it looks like liquid air has an important role to play.

For more on liquid air see the following:

http://liquidair.org.uk/about-liquid-air

http://liquidair.org.uk/full-report

http://liquidair.org.uk/raeng-clcf-conference/raeng-clcf-presentations

http://liquidair.org.uk/flipbook/files/inc/67c183d322.pdf

I have written before about the multiple benefits of energy efficiency beyond purely cost saving.  These can include:

• Reduced exposure to energy price volatility

• Reduced emissions of carbon dioxide

• Reduced emissions of pollutants resulting from combustion of fossil fuels such as mercury, other metals, nitrogen oxides and sulphur oxides

• Reduced need to invest in energy supply infrastructure e.g. electrical grid connections at the host level

• Reduced need to invest in energy supply infrastructure in the wider electricity generation, transmission and distribution system

• Reduced

• Improved quality of production in industrial processes

• Higher productivity, health and well-being of employees

• Improved comfort

• Improved health and reduced expenditure on health

• Increased property values

• Reduced local pollution

• Job creation

Now RAP – the Regulatory Assistance Project in the US, has coined a great phrase to cover this point about multiple benefits – “the layer cake of energy efficiency”.  The article can be found here: http://goo.gl/bV1bUv

We need to make sure decision makers in companies, the public sector and government appreciate and value all the layers of the energy efficiency cake.  Government and regulators need to put in place appropriate mechanisms to ensure that the value of the whole cake is counted in any assessment of demand side versus supply side decisions.  At the risk of taking baking analogies too far – we are currently only eating the icing but we need an energy efficiency version of the great British Bake Off in which we enjoy every layer of the cake!