Energy & Waste

The first National Infrastructure Assessment showed that Britain can and should have low cost and low carbon electricity. With the country committed by law to reach net zero greenhouse gas emissions by 2050, decarbonising the power sector is essential.

The Assessment in 2018 recommended that the electricity system should be running off 50 per cent renewable generation by 2030, as part of a transition to a highly renewable generation mix.

Since then, the Commission has updated its recommendations based on new evidence which showed how further falls in the cost of renewable technologies strengthen the case for a bolder target of 65 per cent renewable generation by 2030. This can be delivered at the same overall cost as meeting only half of total demand by that date.

As part of the second Assessment’s Baseline Report, the Commission will be undertaking a project on a low cost approach to delivering a decarbonised, secure and flexible electricity system by 2035. This project will help shape the recommendations in the second Assessment, to be published in 2023.

The case for committing to a new fleet of nuclear power stations now is weakened as the costs of deploying onshore wind, offshore wind, and solar have fallen dramatically.

The National Infrastructure Assessment recommended that government should not agree support for more than one nuclear power station, beyond Hinkley Point C, before 2025.

The Assessment also stressed that future nuclear power plants will not be built by the private sector without government support. The shape this support takes has implications for the balance of risk between the private sector, electricity consumers and the taxpayer. These considerations impact the potential value for money a project offers and therefore its financial viability.

In October 2019, the Commission published a paper comparing different ways to procure nuclear infrastructure and providing a method for evaluating the type and size of costs associated with funding a nuclear plant using a regulated asset base (RAB) model.

Heating homes accounts for around 20 per cent of the UK’s greenhouse gas emissions. If the country is to meet its net zero target, this must change. However, there is no one technology that can solve the problem and the evidence base on alternatives to gas boilers is still developing.

The National Infrastructure Assessment recommended developing an evidence base that would help clarify the way forward. Large scale trials of hydrogen, from its production to use in homes, are needed to test whether it is a realistic solution. Similarly, an up-to-date evidence base on heat pump performance in the UK housing stock must be gathered.

In the Baseline Report for the second National Infrastructure Assessment, the Commission committed to undertaking a project investigating the challenges associated with finding a viable pathway for heat decarbonisation, and to provide further policy recommendations on the best policies and funding to deliver net zero heating to homes and businesses across the country.

Regardless of which technology replaces natural gas boilers one thing is clear: the UK’s housing stock must become more energy efficient. The National Infrastructure Assessment recommended that the rate of installations of energy efficiency measures in the building stock should reach 21,000 a week by 2020. This level should be maintained until a decision on future heat infrastructure is taken.

Achieving net zero greenhouse gas emissions means helping drivers transition away from petrol/diesel engines – which account for a quarter of UK emissions – and towards electric vehicles (EVs). EVs are becoming an increasingly familiar sight on roads and offer real benefits for drivers and the environment, and the government has committed to the phasing out of the sale of new petrol and diesel cars to encourage drivers to make the switch.

However, a rapid transition to EVs needs the right infrastructure support. The National Infrastructure Assessment explored how to give drivers the confidence they need to switch to an electric vehicle.

A national rapid-charging network is crucial. While much of this is best delivered by the private sector, government will need to act ensure the chargers are also installed in rural areas where the demand is likely to be lower. Allocating more council parking spaces to charge points, and increasing investment in a smarter electricity network to support innovations like smart charging, are also crucial.

The National Infrastructure Assessment identified that much of England’s waste is still incinerated to produce electricity and heat.

Lower cost, lower carbon options exist for many types of waste such as food waste and plastics. Currently the UK’s plastic recycling rate is just 30 per cent, and 53 per cent of households throw away items that could be recycled.

Here, the Commission has recommended practical steps to enable a step change: separate food waste collection for all households and businesses in England to enable biogas production, changes to how waste is collected to enable higher recycling rates, and revised packaging and labelling to use less resources and encourage easier recycling.

As part of its work on the second National Infrastructure Assessment to be published in 2023, the Commission will be undertaking a new project in its Baseline Report looking at how changes to the way the country manages its waste can help support the development of a more circular economy.

In October 2015, the Commission was asked to consider how the UK can better balance supply and demand for power, aiming for an electricity market where prices are reflective of costs to the overall system.

The Commission found that a flexible electricity system could save consumers up to £8 billion a year by 2030, help the UK meet its 2050 climate target and secure the UK’s electricity supply. This would be based on developing three key technologies: interconnectors, storage, and demand side response management.

The Commission recommends that government should set out a pipeline of pot 1 Contracts for Difference auctions, to deliver at least 50 per cent renewable generation by 2030, as part of the transition to a highly renewable generation mix. Government should:

• Move technologies that have recently become cost competitive, such as offshore wind, to pot 1 following the next Contracts for Difference auction in Spring 2019. Pot 1 should be used for the overwhelming majority of the increase in renewable capacity required.
• Publish indicative auction dates and budgets for the next decade by 2020.
• Over time take whole systems costs into account in Contracts for Difference auctions, as far as possible.
• Consider whether there is a case for a small-scale, pot 2 auction in the 2020s, if there are technologies which are serious contenders for future pot 1 auctions.
• Not agree support for more than one nuclear power station beyond Hinkley Point C, before 2025.

The Commission recommends that government needs to make progress towards zero carbon heat:

• Establishing the safety case for using hydrogen as a replacement for natural gas, followed by trialling hydrogen at community scale by 2021.
• Subject to the success of community trials, launching a trial to supply hydrogen to at least 10,000 homes by 2023, including hydrogen production with carbon capture and storage.
• By 2021, government should establish an up to date evidence base on the performance of heat pumps within the UK building stock and the scope for future reductions in the cost of installation.
• Set a target for the rate of installations of energy efficiency measures in the building stock of 21,000 measures a week by 2020, maintained at this level until a decision on future heat infrastructure is taken. Policies to deliver this should include:
  • Allocating £3.8 billion between now and 2030 to deliver energy efficiency improvements in social housing.
  • Government continuing to trial innovative approaches for driving energy efficiency within the owner occupier market.
  • Government setting out, by the end of 2018, how regulations in the private rented sector will be tightened and enforced over time.

The Commission recommends that government should set a target for recycling 65 per cent of municipal waste and 75 per cent of plastic packaging by 2030. Government should set individual targets for all local authorities and provide financial support for transitional costs. The government should establish:

• Separate food waste collection for households and businesses (to enable production of biogas) by 2025.
• Clear two symbol labelling (recyclable or not recyclable) across the UK by 2022.
• A consistent national standard of recycling for households and businesses by 2025.
• Restrictions on the use of hard-to-recycle plastic packaging (PVC and polystyrene) by 2025.
• Incentives to reduce packaging and for product design that is more easily recyclable by 2022.
• A common data reporting framework for businesses handling commercial and industrial waste by the end of 2019, ideally through voluntary reporting but if necessary by legislation.

The Commission recommends that government, Ofgem and local authorities should enable the roll out of charging infrastructure sufficient to allow consumer demand to reach close to 100 per cent electric new car and van sales by 2030. Government should address the implications of technological innovation in long term transport planning processes, including the next rail control period and road investment strategy.

• Ofgem should take on the role of regulating the interaction between electric vehicle charge points and the electricity network immediately, ensuring that electric vehicle charging and vehicle to grid services contribute to the optimisation of the energy system. Government, industry and Ofgem should work together to set minimum standards for a network of interoperable, smart charge points
• Ofgem should commission electricity network operators to work with charge point providers to identify potential anticipatory investments required to accommodate public charging infrastructure. Opportunities for investment within the current price control period should be identified by Summer 2019
• Government should place a requirement on local authorities to work with charge point providers to allocate 5 per cent of their parking spaces (including on-street) by 2020 and 20 per cent by 2025 which may be converted to electric vehicle charge points
• Government should subsidise, by 2022, the provision of rapid charge points in rural and remote areas, where the market will not deliver in the short term
• Government should establish a centre for advanced transport technology in the Department for Transport to bring together work on technological innovation and ensure its implications are central to future investment proposals. This should include developing and overseeing the Commission’s proposed connected and autonomous vehicles framework.

Interconnection investment decisions should continue to sit primarily with the private sector, but there is a role for government-led diplomacy to unlock those markets that can offer potentially large benefits to UK consumers. The government should therefore focus its efforts on exploring increased interconnection to markets with abundant sources of flexible low carbon electricity, such as Norway and Iceland.

Two steps are required:

1. DECC and Ofgem should review the regulatory and legal status of storage and remove outdated barriers to enable storage to compete fairly with generation across the various interlinked electricity markets. The reforms should be proposed by Spring 2017 and implemented as soon as possible thereafter
2. Network owners should be incentivised by Ofgem to use storage (and other sources of flexibility) to improve the capacity and resilience of their networks as part of a more actively managed system.