UK in “regulation zone” of Energy Transition Readiness Index

The UK is lagging behind some of its European neighbours when it comes to making progress on the road to achieving its 2030 decarbonisation goals.

The Association for Renewable Energy and Clean Technology (REA) has released its third Energy Transition Readiness Index (ETRI) report and found that among the 13 European nations evaluated, the UK is one of the worst performers in paving the way for a transformed energy system fit for a Net Zero future.

The report describes some of the key electricity market characteristics for each country, assessing the current and future need for flexible power resources, and also takes a look into how the recent energy crisis has affected ambitions on net zero and the development of grid flexibility.

Analysts found that the energy transition is well underway in many European countries, enabled by public policy, regulation, power markets and technology, but the pace of progress varies widely. Finland alone was found to be the most transition-ready state, with Denmark, France, the Netherlands, Norway and Sweden in the second tier and Germany, Ireland, Italy, Poland, Spain, Switzerland and the UK in the third.

While the report highlights the UK’s “ambitious long-term goals”, it also says that “current policy priorities appear more focused on the short-term”. This approach is disincentivising increased investment in renewables and the development of flexibility resources.

A recent European industry study suggests that the deployment of demand-side flexibility resources could result in annual cost savings of up to some €300 per customer in 2030, plus annual savings of  37.5 million tonnes in GHG emissions. A similar study in the UK suggested that annual savings of up to £600 per customer could be realised in 2050.

Energy transition governance and regulation, grid access delays, and unfavourable flexibility markets all are highlighted as barriers which will hold back the deployment of renewable energy in the UK. In addition, the energy crisis has seen a decline in both public and political confidence in the costs associated with the energy transition.

However, the REA is clear that the long-term financial impact of slowing the energy transition will be severe.

REA CEO Dr Nina Skorupska CBE, said: “As ETRI 2022 makes clear, despite the warm rhetoric from the government, the UK is lagging behind many other countries in preparing for the energy transition – if this was a league table, the UK would be in the relegation zone.

“We now need to see significant action from the government to remove the barriers facing our industry – proper long-term planning, prioritising and accelerating market reforms, and urgently addressing  current investment barriers – all are desperately needed to help put the UK on the right path.

“I don’t underestimate the challenge ahead of us, but the cost of the government moving too slowly on preparing for the energy transition is simply too great. Our country is in the midst of a severe  energy crisis, but the government will store up even greater problems for the future if they don’t act now.”

Siobahn Meikle, MD for Eaton UK and Ireland, said: “As a global power management company, we see that businesses around the world are picking up the pace towards net zero, spurred on by the energy crisis to examine technologies such as renewable energy generation, energy storage systems and the energy flexibility benefits of EV charging infrastructure. Governments must match burgeoning business enthusiasm with policies to deliver the fair, transparent, and easily accessible markets that will seal private investments in the energy transition. As the ETRI report shows, the Nordic countries provide a model. Britain, together with other countries that are trailing in the rankings, must catch up.”

Stephen Hill, partner at Eversheds Sutherland, said: “Everybody is agreed on the need for change – but this report highlights how urgent that has now become for the UK and certain other European jurisdictions. A transition to clean energy is in everyone’s interests; it will help hit vital environmental targets, save consumers money, and provide the energy security so vitally needed at present. There is a dynamic and committed clean energy sector that is keen to move to the next level.

REA’s ETRI 2022, can be read here in full: https://www.r-e-a.net/resources/etri-2022-energy-transition-readiness-index-report/

The Energy Transition Readiness Index (ETRI) 2022 is produced by the Association for Renewable Energy and Clean Technology (REA) and sponsored by Eaton and Eversheds Sutherland.