Sunday, December 12, 2021



Decentralisation is one of the three D’s for the future of low carbon energy sectors. It sits with decarbonisation as another factor driving smaller scale renewables generation, and digitisation, potentially enabling more localised control. But how much does the future lie with smaller local systems? Will a centralised National Grid remain at the core of the power sector? And will there be a resurrection of the prospects for localised combined heat and power schemes?

One organisation pushing a decentralisation agenda is the Association for Decentralised Energy (ADE). However their recent report makes some extravagant and misleading claims about the waste of energy in the “centralised” and “legacy” power systems that the UK currently enjoys. The report implies easy routes to eliminating waste, implicitly through combined heat power (CHP) schemes.

“Inherited from the public system of the 1960s and 70s, less than 10% of UK power stations currently recover waste heat, and this represents a missed opportunity to save £2 billion annually.”

The apparently obligatory deference to supposed virtues of the UK privatised power model, and the assumed culpability of a distant public sector past, are contradicted by historical fact. Almost all current power generation, both in renewables and combined cycle gas turbines (CCGT), is from plant built after 1990, within a supposedly “market driven” privatised power sector. About 2.1 % of November 2021 generation was from the nationalised industry “legacy” of coal, and none is baseload.

Wastage and CHP

ADE adopt the rather tired and misleading argument that electricity generation from fossil fuel “wastes” heat energy, and that combined heat power, essentially a decentralised operation, could therefore provide a substantial contribution to a low carbon economy, with considerable cost saving and efficiency gain.

This subject requires some understanding of the thermodynamic principles of energy and entropy. Not all energy is "useful" in the thermodynamic sense of its availability to perform real work (or even to heat homes effectively). “Waste” is an emotive and misleading way to describe the truth that conversion from “low grade” energy (eg coal) to something useful, like electricity, consumes energy en route. An internal combustion (ICE) vehicle may “waste” 75 % of the fuel in the tank but no-one imagines this waste heat is easily captured by the driver for useful purposes[1]. (Switching to electric vehicles offers three times the notional efficiency at point of use, but will of course incur upstream heat loss if from thermal generation.)

Combined heat power (CHP) schemes aim to make use of the heat content lost in fossil fuel generation to improve the overall efficiency, either through use of high temperature heat in industrial processes or lower temperature heat for buildings in winter. This is a laudable aim but it has an increasingly limited economic or carbon reduction potential for several reasons.

First, a much more compelling case for CHP was made, but without much success, in the 1970s, when the best fossil generation had thermal efficiencies in the 35-40 % range, and domestic gas boilers were about 60 % efficient. CHP offered theoretical overall efficiencies of 80 % (before distribution). The 1990s development of combined cycle gas turbine (CCGT) generation, with best in class efficiencies of around 65 % in baseload operation, and domestic condensing boilers with 90 % efficiencies, eliminated most of the theoretical cost and energy savings from CHP.

Second, efficiency claims for CHP systems were, even then, frequently overstated. Heat is lower-quality energy than electricity, and only at high temperatures does it become close to comparable utility. The number of such high temperature applications is limited, largely to industrial process heat, and was not helped by UK de-industrialisation. The more modest efficiency gains with low-temperature waste heat use, with potentially wider application to residential heating, carry heavy retro-fitting costs, and don't necessarily lead to substantial improvement in overall energy use, due to lower thermodynamic efficiencies, particularly if heat network and distribution losses are taken into account.

Third, and most crucially, a zero carbon economy requires rapid elimination of virtually all fossil fuel use, starting with its use in power generation. Renewables such as wind and solar, at whatever technical efficiency, do not in any case generate “waste heat”. There may be a plausible future role for heat networks fed by smaller scale modular nuclear reactors, but otherwise the potential for fossil-based CHP schemes seems to be confined to a very few niche applications.

“The UK could save the equivalent of £23 per household just by upgrading our electricity network's efficiency to match that of Germany's.”

International comparisons are often dangerous guides to reality. Losses in developed economies are a function of geography and economic structure as much as efficient network management. A casual inspection of energy statistics indicates that in Germany industrial consumption is nearly double that of domestic, while in the UK the reverse is true and domestic use exceeds industrial, reflecting the demise of much of UK heavy industry under the Thatcher governments of the 1980s and 1990s. Since heavy industry is almost invariably connected at much higher voltages, and much larger percentage losses occur in medium and low voltage distribution networks, Germany’s lower figure tells us little.

A good case can be made for additional capacity investment to reduce UK network losses, and even more so to support the stronger networks needed to cope with the big increase in electricity’s role in a low carbon economy. Some of the network companies regularly make that case, but of course investment has to be paid for, and loss reduction does not therefore automatically lead to lower consumer bills.

Centralising or decentralising factors in a low carbon economy.

The future balance between decentralisation and centralisation requires a much more nuanced analysis. It will of course be geography specific, but we can note a number of factors, in the UK at least, tending towards centralisation and a strong transmission grid:

·         A high proportion of currently projected low carbon sources of power are either intrinsically large scale, like conventional nuclear, may depend on a substantial network infrastructure, like carbon capture, or are remote from consumer load, with long transmission lines, and require central coordination to exploit weather diversity, like offshore wind.

·         Inflexibilities or variabilities in output – for nuclear or renewables – mean that larger interconnected, and inevitably to some degree centralised, systems enjoy major advantages in reducing the cost of reliable supply. Small systems, perhaps with a single source of renewable energy, need interconnection. And the UK system benefits from international interconnection.

·         The importance and relevance of energy storage for power systems can accentuate the above.

On the other hand, there are forces for decentralisation.

·         There is demonstrably an essential need for much more consumer involvement in the operation of power systems. Low carbon generation gives rise to much more complex needs, including the management of overall demand with more sophisticated tariffs having a major role. 

·         There is a plausible role for heat networks, as one alternative to heat pumps, of which CHP associated with modular nuclear is one possibility. These may be the more suitable option in some urban environments. They require substantial investment in retro-fitting and communal maintenance and strong local governance structures such as local heat authorities.

·         Changing patterns of electricity generation and use may create new and localised problems in the management of lower voltage networks, so that more control, management and governance systems are required at lower voltage levels, but without reducing the importance of the high voltage transmission grid.


Some of these issues can be explored in much more detail elsewhere.

The future of low carbon networks. Heat networks. Enabling Efficient Networks For Low Carbon Futures | The ETI

The future of consumer and network tariffs in a low carbon economy. How must energy pricing evolve in a low-carbon… | Oxford Martin School


[1] though the internal heater may recover a small fraction of that in winter