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Future of Utilities: So how do you replace a 1,386 TWh habit?

Michael Lewis, UK CEO of E.On had a bit of a Eureka moment, which he shared with the Future of Utilities conference this week, in London. He was arguing with a gas turbine executive about whether a carbon free future was even possible. Days later is was nagging him, so he sat down to write his presentation for the conference, and did the following calculations on the back of a cigarette packet or the modern equivalent.

“I know you analyst types, don’t challenge the detail and tell me I’d got it wrong, look at the ideas behind these numbers,”

Then he wrote 1,386 TWh (terawatt hours) in the first column as the total energy output of the UK, much of it the thermal output of gas (around 810 TWh) and oil derived energy around 385 TWh.  So far renewables has managed just 89 TWh with nuclear coal and imports making up the rest. So is this plausible he asked? And initially found himself agreeing with the gas lobby – perhaps not.

But then he slept on it, he said, and slowly over the course of a few days, he began to write down more numbers. The total generation output from gas accounts for 130 TWh of electricity, but in order to create this it uses 233 TWh of gas. That brings the task of renewables down by 103 TWh, because we no longer have to convert from gas.

Residential gas demand will fall from 332 TWh to around 77 TWh, by replacing gas heating in the home with Heat Pumps, instead of gas boilers.

Moving away from oil for cars will save 372 TWh of oil, and replace it with 89 TWh of recharging electric cars, a saving of 283 TWh.

All of this drops the demand in 2018 from 1386 TWh, down 39% to 840 TWh, a far more manageable target. He feels that 321 GW of additional renewable capacity would just about do it and goes on to calculate that Wind could give a sub-tenfold increase from 18 GW to 165 GW, and the same at Solar, leaping from 12 GW to 115 GW, with 50 GW of storage needing to be created. The numbers loosely add up to 321 GW, and he is right of course.

Lewis suggested we might use hydrogen to store energy from the summer to the winter, and use it to boost output, or some other form of long term battery system. And he sees storage, demand side management, and Virtual Power Plant, and Vehicle to Grid pushing the grid up to 500 TWh of capability from 330 TWh today, with grid peak rising to 70 GW from 60 GW now.

He seemed as surprised as everyone else in the audience that by breaking down the steps into clearly manageable ones he could see that regulatory change in particular, creating certainty in investment goals, could get the job done. Lewis gave the example of building regulations being changed to install heat pumps in new homes, instead of gas boilers, along with tax incentives to transform existing homes, and green ISAs and mortgages, then the £600 to £800 billion needed to transform the grid, could happen.

“As long as regulation is long term, and consistent companies like mine will invest,” he said.

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