OXFORD, UNITED KINGDOM - JULY 25: Residents make their way through the flood waters as they leave their flooded neighbourhood on July 25, 2007 near Otney Island in West Oxford, England. Flood levels in the Thames are expected to peak today, with numerous properties already flooded. (Photo by David Silverman/Getty Images)
Oxford residents make their way through floodwater.in 2007 © David Silverman/Getty Images

When parts of Oxford were struck by severe flooding in July 2007, Saskya Huggins and a group of fellow residents decided to make their own contribution to limiting climate change.

“We feared that kind of extreme weather event was going to be far more frequent,” said Ms Huggins. 

The group formed a community organisation and raised money through government funding schemes and share offers to build low carbon energy projects in the area. Among them was Osney Lock Hydro, which since 2015 has been generating an average of 188 megawatt hours a year of electricity on a stretch of the river Thames — enough to power around 60 homes.

Osney Lock Hydro is an example of how Britain’s electricity system has become far more diverse with the rapid growth of renewable energy projects, ranging from solar panels on the roofs of homes and businesses to vast wind farms off Britain’s coast.

The change is challenging energy companies to rethink the design of Britain’s electricity networks, through which power has traditionally been exported from large, centralised power stations to the main transmission network and then distributed to homes and businesses by local network companies. Smaller, renewable schemes instead export power to local grids, forcing local networks to accommodate two-way flows.

National Grid, which is in charge of balancing the system, said 29 per cent of Britain’s generation capacity was now connected to local grids rather than the main transmission network. It has forecast that the proportion of this “decentralised” energy could rise to as much as 58 per cent by 2050 as the UK strives to meet its 2050 net zero emissions target.

Saskya Huggins and Barbara Hammond, directors of Osney Lock Hydro, with Mim Saxl form Low Carbon West Oxford at Osney Lock Hydro, a community owned hydroelectric scheme on the Thames in the centre of Oxford. 26/11/2019 - Photograph by Sam Frost ©2019 - www.samfrostphotos.com
Saskya Huggins and Barbara Hammond, directors of Osney Lock Hydro, with Mim Saxl from Low Carbon West Oxford at Osney Lock Hydro © Sam Frost/FT

Local electricity networks will be at the forefront of many other changes as key sectors of the economy decarbonise, including meeting demand for electric vehicle chargers. Capital Economics, the London-based consultancy, has estimated that the cost of upgrading electricity infrastructure to support the installation of electric vehicle chargers and heat pumps to replace polluting gas boilers could total as much as £48.5bn by 2050.

Osney Lock Hydro is one of up to 90 local energy schemes that are participating in a £40m study in Oxfordshire called Project Leo, looking at how new grid models could play a role in balancing the electricity system. 

Backers of the research, which is being led by SSE, believe that managing how local energy projects trade their excess electricity to the grid or use and store power, can help to avoid large spikes in demand and avoid costly network reinforcements.

“The more electricity you can balance locally, the less you need to reinforce the network,” said Ms Huggins, who has become social impact director of the Low Carbon Hub, a social enterprise that develops community-owned renewable energy schemes in Oxfordshire and is involved in Project Leo.

Osney Lock Hydro is a community owned hydroelectric scheme on the Thames in the centre of Oxford. 26/11/2019 - Photograph by Sam Frost ©2019 - www.samfrostphotos.com
© Sam Frost/FT
Osney Lock Hydro is a community owned hydroelectric scheme on the Thames in the centre of Oxford. 26/11/2019 - Photograph by Sam Frost ©2019 - www.samfrostphotos.com
© Sam Frost/FT

“We’re looking to sort out how we’re actually going to bring decarbonisation into people’s lives and into businesses much more locally,” said Alistair Phillips-Davies, chief executive of SSE.

The way that companies invest in the power network is also coming under scrutiny as the country’s regulator, Ofgem, prepares for the next regulatory period, which begins in April 2021 and 2023 for local network companies.

Ofgem determines the returns companies are allowed to give their investors and must balance the need for investment with complaints that electricity networks have been making “unjustified” profits at the expense of consumers, who pay for grid costs via their energy bills.

Energy networks warn too harsh a crackdown on returns could thwart the investment needed to reach net zero. “There is a risk that proposals for the next price control period could have damaging impacts on the energy networks’ ability to deliver the government’s plans for clean growth and the wider economy,” said a spokesman for the Energy Networks Association, the trade body.

Keith Anderson, chief executive of ScottishPower, said companies, regulators and policymakers needed to start “mapping out milestones” of how the UK is going to achieve the 2050 target and where investment would be best directed. Otherwise, demand for electric vehicle chargers, for example, could swiftly outpace networks’ ability to cope, he said.

“When that demand starts to come through, you can’t slow it down,” said Mr Anderson. 

Ofgem says the decarbonisation agenda is front of mind as it considers the level of returns that electricity network companies will be allowed to make from 2023. “Our next round of price controls will build on this to ensure the energy networks continue to attract the investment required to maintain high service standards and support the pathways to net zero, while lowering returns and saving consumers money,” said a spokesperson.

Back in Oxford, backers of Project Leo hope local communities will start taking a greater interest in when and how they use power, and how their decisions could help the UK meet its climate change ambitions.

As she looks out over Osney Lock Hydro, Barbara Hammond, chief executive of the Low Carbon Hub, said: “The more we can get this [electricity] used by households in the area, the more they will switch their use to when power is available.”

Get alerts on UK energy when a new story is published

Copyright The Financial Times Limited 2021. All rights reserved.
Reuse this content (opens in new window) CommentsJump to comments section

Follow the topics in this article