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Cheapest energy will always be what we don't use

Pathways to the future

Here in the UK, we rely on electricity to flow at the flick of a switch. So, it’s easy to overlook and underestimate the complexity of the market that allows it to happen. In order for the electricity sector to operate effectively, it is important industry and government work together putting in place long-term policy that meets the needs of today and supports the innovation needed to deliver the electricity for tomorrow.

Now, and in the future, the energy sector needs to be in sync with all its customers. Nothing stays the same and, as needs and attitudes to energy change, so will demand. As electricity generation and supply needs long-term investment, it is vital the industry knows as much as it can about future demand and gets a clear signal of the focus, direction and speed of travel to 2030 and beyond.

This spans more than the power sector alone. We need to take associated sectors – such as heat and transport – into account too. We cannot continue to look at these industries in isolation: a whole systems approach is needed. The power industry understands it will bear the bulk of the heavy-lifting to meet binding decarbonisation targets. As energy, transport and heat become much more intertwined, each will have its own impact on the power sector and the level of investment.

As our future energy choices change, the country must consider – with every decision – how we maintain the delicate balance between security of supply, affordability and decarbonisation.

The energy system is moving to a more decentralised model – with strong roles for wind, solar and storage. This means an important role for policy to continue supporting these technologies until they can stand alone without subsidy.

The country’s energy mix is changing as the government looks to remove all coal from the system by 2025. This will leave room for lower-carbon fuels, like new gas, biomass and wind, to play a greater role in a flexible energy system. We have the opportunity to see advancing technologies take up more of the mix – including storage, solar, wind and tidal.

As the UK decarbonises the electricity system, there will be costs and challenges along the way. So the industry must take its customers with it. The goal is too important to be missed.

The cheapest electricity will always be what we don’t use. Energy efficiency remains the most cost-effective way to help cut energy bills and carbon emissions. Government needs to put policies in place that: encourage improvement; help people struggling with their bills; and kick-start the-able-to-pay market.

The energy world is changing to meet the needs of our busy lives; by 2020 every home will have a smart meter allowing us to take control of the energy we use in ways not previously possible. And, while the future is an unknown land, one thing is certain – Britain’s energy sector is ready to take up the challenge and to work both with customers and other sectors. The ‘Pathways’ report sets out a vision and a pathway but Britain needs the policies in place to take it from the page to the practical future.