How UK electricity procurement & use could transform by 2033

By Dr Jon Hiscock | CEO | Fundamentals ltd.
Dr Jon Hiscock, CEO of Fundamentals ltd. looks at how UK electricity procurement, usage and infrastructure could transform by 2033

Like every developed country, the UK electricity industry has spent decades procuring billions of pounds in assets and systems  for generation, transmission and distribution. But many of those assets and systems – and the markets in which they operate – were not designed to address the increasingly pressing challenges the world now faces.  

So, let’s imagine we are in 2033. If we look back at a decade of radical changes in the electricity sector, what would we find?  The way electricity is regulated, traded, generated, transmitted, distributed and consumed would have changed significantly. What role would new approaches to procurement have played in delivering greater energy security, reliability and affordability in the race to net zero?

Here are some of the changes that could take place over the next ten years.

The lightbulb moment

The fraught winter of 2022-3 brought a dawning realisation. Energy security, affordability and carbon neutrality could not be achieved with stop-start policies and short-term fixes, from subsidising power bills, to scrabbling for more fossil fuels. The issues were inextricably connected, and the UK needed a strategy to address the causes of the emergency, for the long term.

The government created a new ‘Strategic Energy Authority’ which lay the foundations of a new 10-year strategy for the UK electricity industry. It brought together all parties and regional governments, the industry regulator Ofgem and key industry players. It quickly recognised that we already had most of the technologies and innovations we needed to transform the sector. Now we needed to deploy them. 

The result was a realistic route map with actions and binding targets, enshrined in law. Successive governments since then implemented the strategy with little deviation, providing industry players, investors and customers with unprecedented certainty.

The impact on procurement was profound. The focus shifted from short-term fixes to strategic investment which would deliver the best long-term outcomes. Return on investment was redefined in terms of the whole range of targeted outcomes – not just immediate profitability.

Sustainability = Security

One of the key lessons from the 2022-3 energy crisis was that UK energy security could only be achieved by a high degree of energy independence. Less imported, more home-produced. Energy that was more reliable, affordable and less subject to the dramatic fluctuations in supply and price than the global fossil fuel market.

The strategists realised we had the potential to deliver security, affordability and sustainability together. The UK was blessed with abundant potential sources of low carbon energy – wind, solar, hydro, tidal, wave, geothermal and more. And we had the engineering skills and talent for innovation that could harness them. 

But in the case of electricity, we needed radical changes to how the industry worked, to deliver the key strategic imperatives of: ‘Sustainable energy must always be the best investment – and cheapest consumer choice’. 

The necessity to tax carbon to fund public investment in renewables was only part of the approach. Major investment from the private sector was attracted through a range of incentives.

Obstacles demolished

By 2023, it was obvious that the model of centralised electricity generation, with distribution to passive consumers and inflexible market trading arrangements, was no longer fit for purpose. Demolishing obstacles that prevented new ways of doing things was one of the first strategic priorities.

First to go were the hurdles which meant that, while renewable installations such as wind or solar could be built in a matter of months, the approval processes for getting them online could take years. The bonfire of red tape was only part of the story. Further obstacles in terms of physical connection to the grid and how the energy was traded were also overcome.

The new strategy encouraged and enabled more renewable generation at every level. For example, rooftop solar (plus better insulation and heat pumps) alongside local battery storage to avoid grid pressures, became part of building regulations for all new properties where they were practicable. And realistic incentives for retro-fits were reintroduced.

Microgrids go big

Microgrids of all shapes and sizes blossomed across the UK. Already proven models for their creation were refined and developed into templates which could be implemented quickly and economically. 

As with commercial renewable installations; the obstacles of lengthy approvals and grid connectivity were overcome. Among the innovations, the adoption of contractless peer-to-peer trading removed the need for commercial interactions.

The scale of localised grids now ranges from small communities to whole regions and local authorities. All use whatever generation sources are available in their area, including hydro, tidal and wave, for example, together with a range of storage solutions. Most local communities now trade with the grid and many are capable of being wholly self-sufficient when needed.

The electricity internet

The concept of ‘the electricity internet’ caught people’s imagination. Just as the internet transformed communications from centrally controlled over narrow channels, to an infinitely flexible platform that anyone could use, the idea of a plug-and-play grid gained traction rapidly.

But the electricity platform also needed stable base load. So, new nuclear plants already in the pipeline continued to be rolled out, together with smaller modular reactors which were commissioned quickly. Some have been deployed as part of larger regional grids.

Offshore and onshore wind continued to expand, as did solar. Tidal barrages and lagoons, plus wave energy farms, geothermal boreholes and hydro are also playing their parts increasingly. Interconnects stretching from Norway to North Africa are further enabling us to play an active part in the expanding international market for green electricity.

Fossil-based gas is still with us, but it is the fuel of last resort, as the costs of renewables have continued to fall, and storage provides most of our balancing and standby power. 

Green hydrogen explosion

The availability of low-cost green hydrogen, produced in volume when there is a surplus of renewable electricity, has driven its widespread adoption as part of our energy mix.

Hydrogen’s versatility as a means of storing and transporting energy has led to a multitude of uses: in fuel cells, a new generation of clean internal combustion engines and an addition to the remaining natural gas network.

Above all, green hydrogen from surplus renewable plants maximises their effectiveness and delivers valuable returns for investors.

The power of storage

The massive increase in our capacity to store and release electricity on demand was proven to be key for integrating intermittent renewables and balancing the grid. The old argument that ‘renewables don’t work when there’s no wind or sun’ has faded into history.

Incremental improvements in battery technology over the decade have made them longer lasting, cheaper, more energy dense, with faster charging and discharge rates. They are increasingly deployed at every point on the grid, from industrial super-sites to part of local microgrids, to domestic houses. 

The 12 million (and rising) electric vehicles on UK roads are also an integral part of our electricity infrastructure. The great majority are connected to their suppliers via truly smart meters, providing a vast, interactive electricity storage resource and enabling the intelligent deployment of automatic time-of-use pricing and demand side management.

Batteries are not the only storage solution. Pumped water, phase change materials and heat stores are all playing their part. 

Grid under new management

The UK electricity industry has been re-engineered rather than physically rebuilt. Everything was on the table in 2023, from how electricity was traded and priced, to how investment was to be justified and funded. The driver was simple: what do we need to do to make the 10-year strategy happen?

Existing players were given new, more flexible roles, which liberated their ability to embrace and deliver change. The model shifted dramatically from centralised generation-to-passive-customer, to distributed generation and highly interactive relationships with localised microgrids and individual customers. Many innovations that were proven effective at demonstration stage were fast-tracked into mainstream deployment.

Trading arrangements were reviewed and revised. DNOs (Distribution Network Operators) completed their transition to DSOs (Distribution System Operators), enabling them to do far more on ‘other side of the meter’. And the universal roll out of comms-enabled smart meters enabled DSOs and electricity retailers to work together to make the best use of time-of-use pricing (TUP), demand side management (DSM) and microgrid resources for consumers. 

From dumb to digital

So - how did we adapt a distribution infrastructure built for the old world, without having to start again and rebuild the whole thing at enormous cost? The answer was to make the existing grid much smarter, by overlaying it with wholesale digitisation and communication. Then using the new capabilities to roll out new ways to control and maintain it.

Digitisation and communication have enabled the application of automatic voltage regulation across whole networks. They play a key role in balancing loads from increasingly complex connections to the grid, from both supply and demand sides. 

AI and deep machine learning have also become key technologies in modernising the grid. Their applications now range from automatic voltage control to asset management, including predicting and fixing faults, long before they caused outages. The industry has moved from responding to failures, to preventing them from happening.

As usage patterns have changed, with more electric vehicles, heat pumps and photovoltaics coming on stream, the difference between minimum and maximum load has become increasingly diverse –in magnitude, location and time. This has driven the adoption of more active regulation of voltage throughout the network, in coordination with other techniques already being deployed.

Reasons to be cheerful

Here in 2033, the UK is a lot less dependent on imported electricity – most of it fossil based – than we were a decade ago. The electricity we use is overwhelmingly home-produced, well managed and reliable. Now we have a high level of energy security.

Our strategy of harnessing the UK’s abundant availability of natural forces to generate electricity has proved attractive for investors and the right long-term choice for industry and consumers. Our electricity is affordable and largely immune from the shocks of volatile international markets. And we are a long way further on the road to making Britain carbon neutral.

The UK electricity industry has changed from being a heavy cost to the national economy, to a vibrant sector with long term, highly skilled jobs and growing energy exports. The innovative technologies that have been pioneered in voltage control, digitisation, AI, control, automation and predictive maintenance are reaching international markets.

The UK electricity revolution is far from over. But there is much to celebrate in 2033.

The Author, Jon Hiscock is CEO of Fundamentals Ltd and Director of its subsidiaries; Fundamentals Australia Pty Ltd, Ferranti Tapchangers Ltd and Powerline Technologies Ltd. Jon has applied his strong scientific background and ambitious entrepreneurship to grow the operation significantly and transform it from a small family business to a medium professional business.


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