OpinionStories

How can the structure of our energy markets support the transition to net zero?

Posted

Authors: Gavin Starks and Alex Howard, Director of Research, Centre for Net Zero

We urgently need to take action to mitigate climate change. While there is clearly a need for bold leadership, no single organisation or sector can act entirely in isolation. Energy is a complex, interconnected system – bringing with it risks of unintended consequences and of significant inertia. Closed datasets impede the coordination and collaboration we desperately need, prolonging the status quo and locking out new entrants and insights.

At the Centre for Net Zero, our mission is to realise faster, fairer and more affordable paths to net zero. At the heart of our work is a not-for-profit Open Research Lab. We lead groundbreaking global research on the biggest questions in the energy transition, and make our data, models and reports freely available for everyone to understand, challenge and build on.

One of the questions we’re exploring is how the structure of our energy markets can support the transition to net zero. In order to make sensible changes to the way that our energy markets work, we need to think about the whole system – identifying impacts and feedback loops that might not be intuitive. Data is one of the essential ingredients to this, but no one party has all the data they need to think about the system as a whole. Relatedly, a key part of our mission is supporting the fairness of the energy transition. Access to wider datasets helps protect against implicit biases within the data we work with, and safeguard against unintended impacts on particular parts of society.

The Open Energy programme offers exciting new possibilities for thinking about the energy system in a more joined up way. At the moment it’s hard to imagine the impact of new policies or market structures because it’s hard to track how people, markets and physical systems all interact. But underpinned by shared data, it’s possible to stitch together real-world measurements and models of the various parts of the energy system to create what’s called a Digital Twin. 

With that, we can start to ask insightful questions about what we might do to change the rules of the system. For example, what if we were to dramatically cut the cost of adopting heat pumps, or make unit energy costs reflect the dynamic utilisation of the local network, or introduce a new way to reward electric vehicles for the flexibility they offer. Answering any one of these questions requires data from across the energy system (and beyond) – from the physical networks and assets through to the way we expect individuals and businesses to behave. Making it easier to share, discover and link data are the first steps along that path.

“[Our] new modelling strategy will increase transparency and collaboration. This will improve our insights and increase confidence in policy.” 

UK Government’s Energy White Paper, December 2020

The benefits to our net-zero transition could be enormous. There is great potential to underpin broader and more productive research collaborations. I see a growing number of passionate and intelligent people coming to this mission, and an urgent need to find effective ways for them to contribute and collaborate. I also believe there is a real opportunity for the UK to establish a leadership position around energy data, which can facilitate change on a global scale.

For the Centre for Net Zero this means the opportunity for greater impact – through richer analysis for policy makers, business leaders and investors, which in turn allows them to make bolder decisions about their role in the transition.

About the Centre for Net Zero

Backed by Octopus Energy, the Centre for Net Zero is an Open Research Lab focused on the energy transition and working closely with governments, cities, investors and businesses around the world to get us to net zero quickly, fairly and affordably. Find out more at CentreForNetZero.org.

About Icebreaker One

Icebreaker One is a UK-based non-profit making data work harder to deliver net-zero, working across agriculture, energy, transport, water and the built world. Its Open Energy project aims to revolutionise the way energy data is shared in the UK and create an energy data ecosystem that works for everyone. More information at IcebreakerOne.org