About United Kingdom's national settings for energy communities
This presentation focuses on UK's national settings, affecting the emergence and functioning of energy communities. It briefly looks at its socio-economic conditions, energy retaled technical systems, such as its consumption and production, heating and electricity systems and other important factors, institutional settings, such as political goals and tax schemes, and British actors, relevant for energy communities.
The information is taken from the NEWCOMERS deliverable, titled Description of polycentric settings in the partner countries.
Embeded interactive presentation
The topic of this presentation is the UK national settings for energy communities.
This is primarily connected to the Economic aspect and the policy and regulations aspect of the new clean energy communities.
The information in this presentation is taken from the NEWCOMERS project research activity, summarized in the deliverable titled Description of polycentric settings in the partner countries that you can find on this link: https://www.newcomersh2020.eu/upload/files/D2_2_newcomers_typology_of_new_clean_energy_communities_DEF.pdf
We developed the content of this presentation with the expert support by prof. Jenny Palm and dr. Katharina Reindl from the International Institute for Industrial Environmental Economics (IIIEE) at Lund University in Sweden, the NEWCOMERS project consortium partner.
We recommend you to first take a look at the introductory Content Item about the importance of national settings for the operations of energy communities.
2. CENTRAL PART – CONTENT
In this presentation, we offer only a selection of key data about the UK, You can find more detailed data here.
1. Socioeconomic conditions
UK has the population of around 67 500 000 people on an area of 241930 km2. It has the sixth largest economy in the world in nominal GDP and the ninth largest in relation to GDP at PPP. In Europe it has the 15th highest GDP per capita. The employment rate is higher than the EU level.
2. Technical systems
Now we're going to briefly look at UK’s energy system, which is explained in much more detail here.
a. Energy production and consumption
UK’s total primary energy production decreased for over 50 % in the last two decades. Both oil and gas production have fallen since then and renewable energy production has increased. Coal production in the country has fallen sharply over the past four decades and most mines have closed. Consequently, the UK has become more dependent on fuel imports. The transport sector is the largest energy-consuming sector.
b. The electricity system
The UK’s electricity generation peeked in 2003 and has been steadily declining since then. Natural gas accounted for 40 % of energy generation, followed by renewable energy, with 33 %.
c. The electricity grid and smart grids
Great Britain is a single energy market with a single price zone. The wholesale electricity market is based on “self-dispatch”, where suppliers and generators contract to buy and sell power and have to pay balancing costs if they under- or over-deliver.
d. The heating systems
Heating in the UK is largely supplied through individual gas boilers; changes in space- and water-heating practices will be crucial in meeting climate change targets.
e. Energy related emissions
Energy related GHG emissions account for about 81% of the total. UK energy-related CO2 emissions have declined by 35% compared to 1990 levels, and total greenhouse gases (GHGs) are down by 40%, reaching some of the lowest levels recorded since 1888.
3. Institutional setting
Now we're moving on to institutional setting, where we'll briefly discuss political goals and policies, tax schemes and prices in the UK.
a. Political goals and national energy agreements
The United Kingdom adopted the Climate Change Act in 2008, the first piece of legislation to set legally-binding targets for government. The goal is to reduce GHG emissions from 1990 levels by at least 80 % by 2050. To achieve this the government has established the Committee on Climate Change (CCC), an expert body with strong advisory powers that sets five-year caps on emissions, so-called carbon budgets. Other strategies and acts were also put in place to foster energy transition.
b. Performance on EU 2020 energy targets
The UK is reaching some targets set by the EU, particularly lowering their emissions. They have yet to reach the targets regarding RES, especially in the transport and heating sectors.
c. Electricity market, policy and law
The Electricity Market Reform (EMR) of 2013 started as a supply-side reform, but has been encouraging also for the power sector transition. The Energy Act 2013, introduced mechanisms to support investment in low-carbon electricity generation. Other support schemes exist to increase electricity generation from renewables.
d. Subsidies and tax schemes
The United Kingdom has three major support schemes for electricity generation based on RES: a Renewable Obligations (RO) that has existed since 2002, FiTs were introduced in 2010, and CFD in 2013. The CFD scheme is the main mechanism for supporting new large-scale renewable energy generation. They are described in detail in the deliverable linked.
e. Electricity prices
The Electricity Market Reform changed the wholesale market design. Wholesale electricity prices in Great Britain were low between 2012 and 2016 but have increased since then. Prices are in general higher than European average.
In this section we will name the key public and market actors. All actors are described in detail in the deliverable.
a. Institutional actors
The central government of the UK leads on overall energy policy, although the Scottish government sets its own, more innovative, policy. The UK BEIS is responsible for ensuring secure, clean, and affordable energy supplies. The Department for Environment, Food and Rural Affairs (DEFRA) works with other departments to make sure that energy policies are aligned with their environmental objectives.
b. Market actors
The wholesale electricity market has been dominated for about 20 years by six vertically integrated companies (active in generation and retail). There have however been many new entrants to the market over the past 10 years, mostly niche suppliers. The wholesale market is moderately concentrated as eight generators provide 71% of the volumes in 2017.
c. Energy communities
According to the UK government website, there were over 5 000 energy communities in the UK in 2015. UK government support for community energy has fallen since 2010. Non-financial support for new initiatives in England, where about 85% of the UK population live, comes from Community Energy England; Scotland and Wales have similar organisations.
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