Energy subsidies should focus on storage and cutting demand, MPs say
Subsidies to reduce the risk of blackouts must focus on energy storage schemes and cutting demand instead of "dirty diesel", MPs have urged.
Currently, power providers are paid to ensure electricity is available to the grid to meet future demand.
But the Energy and Climate Change Committee said current policy favoured diesel generators over smart technology that stores power and reduces demand.
This technology could save billions of pounds for consumers, it said.
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The government's
capacity market policy provides payments to power providers to encourage investment in new electricity capacity - or to keep remaining capacity available - to ensure energy is available when needed.
Under the policy, schemes for energy storage qualify for four-year contracts, while those that pay large users of electricity to reduce consumption at times of peak demand get one-year contracts.
Subsidy system
This is compared to 15-year contracts for new fossil fuel generation.
The committee said the government should redesign the capacity market to encourage energy storage, which ranges from lithium batteries to pumping water uphill and releasing it through turbines when power is needed.
Ministers should also consider a subsidy system to speed up the deployment of storage, given its importance for storing and using power from renewable energy to make the most of the clean technology.
They should commit to making the UK a world leader in storage and set a procurement target for 2020, the committee said.
Keeping fossil fuel power stations on standby is the usual way of meeting peak electricity demand.
An alternative is emerging, using smart technology to reduce demand for energy rather than increasing supply.
The latest invention will allow messages to be sent on the electricity grid. These will be interpreted by a special plug on your hot water tank to heat water when energy is cheap in early afternoon, and avoid using peak power at tea time.
Gathering the many households needed to make smart technology work is costly. And the government's minimum cost plans for back-up power favour fossil fuels.
The MPs say that's a false economy. They say a smart energy revolution will save more money and emissions in the long run.
'Get a move on'
There should also be a clear signal that "demand side response" systems, which encourage electricity users to reduce consumption at certain times, will be bought as a strongly preferred alternative to diesel generation plants.
Committee chairman Angus MacNeil said: "The government must get a move on and encourage the energy market to embrace smart technological solutions like energy storage and demand side response.
"There is an incredible opportunity for the UK to become a world leader in these technologies.
"Yet our current energy security subsidies favour dirty diesel generation over smart new clean tech solutions."
