10 Energy Things I Like and Don’t Like – 6th August 2025

The opinions presented here are my own and do not reflect the views of Energy Systems Catapult or of any organisation that works with the Catapult.

Someone asked me recently if this month’s post would just be 10 things I don’t like, but where’s the fun in that? This post has always been about going beyond the topics I deal with in my day-to-day job to find the exciting, surprising and confusing things we do on the road to Net Zero. Let’s get into it.

1. The REMA decision is a blank space

So it’s gonna be forever or it’s gonna go down in flames

The government rejected zonal pricing without having an alternative policy in place and without conducing an impact assessment of the choice (since there was no alternative policy to assess) – an approach that can be charitably described as unusual. Although the government was probably correct to judge that this decision was unlikely to be appealed (unlike, say, the previous government’s climate strategy), because ongoing uncertainty serves no-one.

And while there is no specific policy, the REMA decision is very clear that the government is prioritising a favourable ecosystem for investment in renewables above all else. This gives a clear indication of what policies are likely to be adopted.

Take, for example Transmission Use of System (TNUoS) charges – my reading of the REMA decision document is that government has no patience for the slow process of Ofgem and industry code reviews, and that it has made its mind up that charges for generators should be stable and based on central plans (with consumers bearing the residual risk when actual investments inevitably turn out to be different from the plans). Ofgem’s milquetoast open letter on TNUoS reform - a near copy-and-paste of text from the REMA decision - would seem to reinforce that interpretation.

Likewise, reform to Contracts for Difference gets no mention in the REMA decision. Whatever the merits of deemed or capacity CfDs (I'm not a fan), they would represent a material change to the nature of investment in renewables. Instead, there was a separate set of changes for CfD Allocation Round 7 that would make the current CfD-backed investment model even more attractive.

But while the policy direction is clear,[1] it has also drawn big dividing lines:

• Between new and existing generators – it is unclear how existing generators could be made whole for changes in TNUoS and connection charges.

• Between generators and storage – flatter TNUoS charges mean batteries and demand response revenues will have to rely more heavily on revenues from the wholesale and balancing markets.

• Between transmission-connected and distribution-connected assets – the Clean Flexibility Roadmap says Ofgem will prioritise reform of Distribution Use of System (DUoS) charges to make them more dynamic. The contrast with TNUoS reform indicates either siloed thinking or different levels of confidence (however justified) in the ability to centrally plan the transmission and distribution systems.

• Between producers and consumers – government is clearing all the roadblocks for investment in renewables in the hope that this will push gas out of the system and save consumers money. It’s a laudable cause. But the outcome is very sensitive to matters that are outside government’s direct control – interest rates, supply chains for both renewables and grid equipment, companies' delivery capacity, and international gas prices. Get unlucky with any one of those and we could end up with the worst of both worlds - a more expensive system and not nearly as much carbon reduction as planned.

So… now that it’s over [note: it’s not over – see all the work still needs to be done on a reformed national market] I can tell you that the “high” wasn’t worth the pain.

2. Aircon for Net Zero?

The heatwaves that swept across Europe and the UK in June and July put into focus emerging interactions between climate change and the electricity system.

The Financial Times (paywalled) estimated that excess mortality in Europe during heatwaves was due to the lower prevalence of air conditioning compared to the US . Nesta has previously made the case that the growing need for cooling in the summer is an opportunity to encourage homes to switch to air-to-air heat pumps, which can provide both low carbon heating and cooling. Research by the Catapult came to a similar conclusion.

Even with the relatively low rates of air conditioning, recent heatwaves have led to spikes in electricity prices due to the combination of low wind and nuclear outputs. And no weather-based system phenomenon would be complete without a German word we’ll soon be misusing.  

3. Kerbside, can’t decide

The surest sign that electric vehicles have gone mainstream is revealed preference – when a company like Zoopla incorporates information on EV chargers into its listings it’s a sign that people are thinking about EV ownership and EV use when they’re making life-defining decisions. So it was great that the Department for Transport announced funding to enable kerbside charging for people who don’t have a driveway. It's a small step that makes EV ownership more affordable to many people. Harder to understand is why a grant has been re-introduced for EV ownership when we’re squarely on the exponential part of the adoption S-curve.

4. Growing the market for Greenhouse Gas Removals

Engineered and nature-based GGRs will become part of the UK Emissions Trading Scheme from 2029. The government decision is largely as per the consultation position. In particular, the current "gross" approach to the emissions cap will be maintained, so each GGR credit would result in one carbon credit being removed from the scheme. Alongside its inclusion in the UK ETS, a new GGR Standard is being developed, which will set out the monitoring, reporting & verification for GGRs to be eligible for ETS credits.

The need for serious policy support for GGRs was underlined in a report by the Grantham Research Institute on Climate Change and the Environment, which mapped the countries that have the greatest competitive advantage when it comes to direct air capture (DAC) and bioenergy with carbon capture and storage (BECCS). The UK's strength is seen to be in the former:

5. Ofgem’s AI sandbox

It’s been quite a month for Ofgem: introducing a ‘technical’ sandbox for AI uses in energy (great!), research into consumer views on standing charges (alright…), the TNUoS letter (meh), launching a review of “cost allocation” (grrrrr), and providing clarity on code governance (phew).

Let’s focus on the positive: a sandbox for AI applications is exactly the sort of thing a regulator should do when faced with an innovation – find a low-risk way for sector participants and the regulator itself to learn about the innovation and its impact on the sector in a real-world setting.  

6. Equiwatt and Schneider Electric get together

Equiwatt[2] – developers of a demand response app – has announced that its software will link up with Schneider Electric’s ‘Wiser’ hardware to provide smart controls of heat and electricity use in the home. This would make it easier to use the Wiser devices to respond to market signals for flexibility. It’s hard to tell how many such integrated offerings exist in the market – some quick research highlighted Octopus’ “Works with Octopus” scheme, which covers a range of smart control providers (tado, Homely, Passiv, etc.) and naturally fits with the retailer’s Agile and Cosy tariffs. More of these would be great – hopefully spurred on by the ability to trade flexibility in the wholesale market.

7. Google’s long-duration electricity storage bet

In the December 2023 edition of this post I mentioned an Italian innovator that managed to secure funding from the European Investment Bank for its carbon dioxide-based electricity storage system. Now Energy Dome has secured an even more lucrative investment from Google, as well as a “strategic partnership”.

Energy Dome’s technology appears to be attractive to a number of investors. The Government of Oman was an early funder, and the company is now developing a co-located solar and CO2 storage project in the Sultanate.

8. Fool me once, shame on… shame on you. Fool me – you can’t get fooled again

I think rules-of-thumb are underused in making big strategic decisions. Here’s one that should harbour little opposition: if a technology shows negative learning rates, stop spending public money on it. Case in point:

What if the technology is essential? Even more of a reason to focus efforts and money on developing an alternative to the point of technical and commercial viability.

Maybe small modular reactors are the answer? It’s worth a punt. Although when people who spent 50 years in the nuclear industry say things like these, it gives me pause:

"SMRs only exist in the imagination of the nuclear industry and its supporters. SMRs can only be found on glossy PowerPoint slides. That is why Mycle Schneider, author of the annual World Nuclear Industry Status Report, dubbed SMRs “PowerPoint reactors” in 2020. There are no engineering plans, no blueprints, no working prototypes."     

9. Floating offshore wind supply chains in South Wales

The Crown Estate’s latest seabed leasing round awarded leases for two floating offshore wind projects in the Celtic Sea – off the coast of south Wales. To help the local area capture some of the economic benefits of those projects – something that has not happened at scale with offshore wind more generally – the Crown Estate is part-funding a scheme to support businesses in the region to enter the floating offshore wind supply chain. (The programme is being delivered by Offshore Renewable Energy Catapult, an entirely separate organisation from Energy Systems Catapult).

10. China is doing capitalism better

With the growth in renewables largely self-sustaining – unquestionably influenced by Chinese state aid that helped the country push down the costs and dominate manufacturing of the solar PV and wind turbines – China is shifting to a more market-based approach. Gone are fixed subsidies for solar and wind, to be replaced by competitive allocation and a payment structure that is likely to resemble CfDs.

What’s distinct from Britain is the presence of complementary policy to incentivise the demand for clean energy – the Renewable Portfolio Standard sets out the minimum share of clean energy that each load-service entity must purchase, from the wholesale market or via PPAs. A similar approach is used in most North American markets, and it makes a lot of sense when applied to mature technologies.

The latest innovation is that the Renewable Portfolio Standard will start to apply to large industrial consumers – aluminium, cement, steel, etc. It’s a logical way to maintain demand for renewables without the market distortion of past subsidies.  

BONUS: 11. Irrational irritability corner

Well done to the geniuses who named their company Scottish Power Electricity North West. That’s double duplication! I hope you get a double bonus for this outstanding work.

[1] This view is not widely shared. See, for example, FTI Consulting’s commentary.

[2] Energy Systems Catapult has supported Equiwatt in the past, although not on this specific collaboration.