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Why decarbonisation is key for energy security

The current crisis shows we need a just and speedy net zero transition

By Kayte O’Neill

The scale of the current energy and cost-of-living crisis is unprecedented. Vladimir Putin’s war in Ukraine has caused the price of gas and electricity to skyrocket. Energy bills have risen rapidly, with many domestic and business consumers struggling to pay their bills and facing extremely difficult decisions this coming winter.

The government’s recent announcement of a temporary energy price cap freeze will prevent the average dual fuel bill rising to over £5,000 per year – which would be catastrophic for many consumers – but it still represents a 150 per cent increase from 2021.

The planned fiscal policy measures can reduce economic pain for some for the time being, but Great Britain must not lose sight of the long-term opportunity presented through decarbonisation and the transition to renewable energy.

As the electricity system operator (ESO) for Great Britain, we are working with the government and industry to build a net zero electricity system that is clean, reliable and fair for all. This is a national challenge that is central to building an energy-secure future, where families and businesses can power their homes affordably and the benefits of green investment can be felt across Great Britain.

Our electricity system is no longer solely powered by a few, large coal and gas-fired power stations. The energy mix is now far more varied, and zero-carbon sources play a major role in powering Great Britain every day.

Despite the progress towards decarbonisation, our energy security is still underpinned by natural gas. This is because when the wind doesn’t blow and the sun doesn’t shine, natural gas is often burned in its place to generate the electricity required to meet demand. Additionally, the spinning parts of gas turbines also act as shock absorbers for the electricity system, stabilising it by slowing changes in system frequency when generators lose power.

This dual reliance on gas leaves Great Britain vulnerable to sudden shocks in global gas prices – brutally evidenced throughout this year. To build a secure, clean and affordable energy system, Great Britain’s long-term reliance on natural gas needs to be reduced.

The ESO operates one of the fastest decarbonising electricity systems in the world and we are building towards carbon-free operation of the system for periods of time by 2025 and then all of the time by 2035. To do this, we’re using first-of-a-kind technologies that can deliver the system stability traditionally provided by fossil fuel power plants and creating new markets that will continue to keep a highly renewable energy-led electricity system balanced.

In today’s wholesale electricity market, all electricity producers receive the same price for their generation, regardless of how much it costs to generate it and how far that electricity must travel. This means that consumers are missing out on cheaper energy at a time when they most need it. Current wholesale market arrangements will not deliver net zero in the most efficient way or at best value to the consumer.

Our Net Zero Market Reform programme proposes new electricity market design options to support decarbonisation, to send the right signals to investors and to reduce costs for consumers. These arrangements would ensure that generators receive a fair price that truly reflects their costs of producing electricity, lowering prices for consumers across the UK.

The transition to a net zero electricity system is a huge opportunity to secure investment in local communities across the length and breadth of the country. Earlier this year we produced a report showing how the government’s ambition of 50GW of offshore wind by 2030 can be achieved and the economic opportunity it presents. This involves securing the connection of an additional 23GW on top of the existing offshore wind pipeline, which could add £54bn to the GB economy and secure nearly 170,000 jobs by 2030. These jobs would be spread over multiple regions across the UK, helping to reinvigorate coastal communities and areas where existing skills bases can be transitioned to benefit from net zero.

The current energy crisis leaves Great Britain with historic decisions to make. The requirement for short-term fiscal intervention is clear but we must not fall short of achieving the transition away from natural gas in the longer term.

The challenges in front of consumers, industry and the government should be used to catalyse the collective effort to create a cleaner, more reliable and fairer energy system. The ESO is proud to play a part in that journey.

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