Customer support is needed to deliver renewables faster and more efficiently, Accenture found in research, with contributions from Eurelectric
The demand side – customers, and society as a whole – will be fundamental to meeting Net Zero goals as fast as possible and at least cost. That was the common theme running through research conducted by Accenture ahead of the annual Power Summit of Eurelectric, the lobby group for power utilities and distribution networks.
Melissa Stark, Accenture’s Global Renewables and Energy Transition Services Lead, said there were five ‘game changers’ for delivering a renewables-led industry: ‘raise the game’ on renewables and the grid; electrify everything; strengthen grids to be the backbone of the future energy system; make the most of the demand side; and provide a clear framework for investment.
Bringing in flexible customers on the demand side would cut costs in running the electricity system, she said – and so would integrating demand and supply in other sectors such as waste, aiming for a whole-system approach to infrastructure that uses inherent flexibility across sectors.
But Stark also quoted Adam Scorer, chief executive of the UK’s National Energy Action charity, who said that “there is no pathway to Net Zero that doesn’t go through the homes of the poor”. The entire population has to support – and, if possible, benefit from – the transition.
Support from the community was also clearly a key input in “raising the game” in building renewables and the associated networks. A theme at the Eurelectric meeting was moving from targets and plans to delivery and permitting is a major barrier – in some cases it takes ten years. As a result, across Europe four times as much wind is in the planning system than is under construction. The EU wants to cut permitting in many areas to a year – an acceleration that will be needed if the renewables industry is to deliver new assets to two or three times faster than today, as will be necessary to meet green energy goals.
I spoke to Wytse Kaastra, a managing director who leads utilities and sustainability in Europe for Accenture, about the need to get societal ‘pull’ to deliver a green transformation faster.
He said, “The political will is there, the technologies are there (at least 90% of them), the capital is there – all the banks want to finance it – so it is really a matter of execution. That’s where we see most of the roadblocks.”
He restates the scale of the challenge, saying that Europe has not seen this scale of investment since World War II.
“We have never seen this,” he says, and he reiterates that the permitting problem is fundamental. “All our systems are about building single things. For a building we take three years to agree on it. We don’t have that time anymore and the scale is much bigger than a single building. We need to build hundreds of (wind and solar) farms. Europe’s way of working does not fit the requirements in terms of speed and acceleration.”
This industry has “learned the hard way” about ‘not in my back yard’, he says: “That has been underestimated and as a consequence poorly managed in terms of engaging consumers and having a collective effort. That is mission-critical.”
He compares the green transition with the Covid vaccine, noting that the vaccine delivery was cut from half a decade to 10 months. He says, “There was strong collaboration between regulators, government and the industry … and the population was on board. We need to do the same with the energy build.”
That brings support back to the forefront, requiring customers and the community as a whole to demand renewables.
Industry ‘pull’
Kaastra agrees that as well as talking about how to build faster, “you also need to create the pull on the demand side.” That may be domestic consumer buying decisions. But he sees a massive opportunity to work with industry and business that committed at COP26 to be Net Zero. “We did lots of research and some have made Net Zero commitments but not all the pledges are being executed at the speed they should be. Much more needs to be done, because if the demand side starts to pull, the supply side accelerates.”
He says business collaboration can help get less commercial technologies across the starting line. For example, “Green hydrogen is not in the money and an electrolyser is not enough. You have to transport the hydrogen and then you need an industry that can absorb the green hydrogen,” and that may involve investing in new plants. Putting that chain together starts to give economies of scale: it also provides a locus for government to make a financial contribution to get over the early years. Finally it has an outcome that is visible to consumers. His example is green steel for an electric car. “I already see the marketing on that car,” he says. “Suddenly something that doesn’t work individually works across the value chain. That’s the kind of collaboration and connections we need.”
Part of what has driven renewables costs down is competition – how can that be reconciled with his vision of collaboration? He still sees a role for competition but suggest it might be at a different point, such as a consortia of energy companies and their industrial customers bidding for offshore wind sites. That needs work, he admits: “you have to look outside old supply chains”.
Where is pressure best placed from outside the companies to prompt faster action by these companies? Are active shareholders, customers, external action groups, more effective?
Kaastra sees a “delicate balance” with regard to companies, which have different pressures and are at different stages in being able to deliver their Net Zero commitments.
“For the utilities it’s a reality, because there is a clear sector commitment, roadmaps, regulations and a carbon price to drive the change,” and, if you increase the price, fossil fuels become too expensive. But many industries do not see a carbon price and some have shareholders split between advocating faster and slower action. However, the current high energy prices will also incentivize the demand side of the economy to seriously engage on energy efficiency and decarbonization.
Nevertheless, Kaastra has some hopes that pressure to speed up delivery is increasing. Over the last five years it has come up the agenda to become a concern for chief executives – and customers are asking questions.