Energising Britain

The UK’s carbon budgets require major decarbonisation of energy supply. By 2050, virtually all electricity must come from clean sources. Large scale use of intermittent renewables will require extensive flexibility options for balancing.

Many options exist: interconnection, storage, demand side response and flexible generation; so consumers should not see any difference in terms of supply quality.

The current pathway relies heavily on wind and solar power, driven by the large cost reductions they have experienced. If these intermittent renewables continue to dominate future electricity supply, the location of power generation will change and the economic activity that comes with it – favouring rural and coastal areas.

The roll-out of smart meters is taking place at very different speeds across Britain. Wales is leading whereas London is lagging. The structure of the housing sector is a strong influence: lower home ownership places some regions at a disadvantage.

Demand response from commercial and industrial sites is already active, but the large domestic resource (e.g. smart appliances such as fridges and washing machines) cannot be tapped without rollout of smart meters.

Energy bills may be higher than today regardless of power sector transformation, due to rising fossil fuel  system service costs. However, large cost reductions in key technologies such as renewables, batteries and hydrogen suggest that regions which can take advantage of these (through electric vehicles and heat pumps) could see the cheapest energy.

Renewables have led to job creation, especially in poorer regions. Scottish renewables have created a strong new industrial sector.

Job losses in the legacy fossil-fuel sectors are offset by growth in renewable industries. The dispersed nature of renewables means that the jobs created in construction, operation and maintenance are in more remote areas, giving a welcome employment boost.

Figure 2.1: Progress towards transforming Britain’s power system, highlighting the areas that are under- and overperforming relative to near-term targets for decarbonisation. Each area is reviewed later in this section

2.1 Current status and future targets for the power sector

The following section will give a detailed analysis on the current status of the power sector, and how it is progressing against its targets. Overall the sector is on track to achieve three out of the six targets examined for this research (with three being well on track) (Figure 2.1). Further, it is falling behind on three other targets. The effects of progress towards each target are not directly comparable, in that achieving some targets will have greater effects on the energy transformation than others. Therefore, this barometer (Figure 2.1) gives an indicative understanding on how the sector is progressing.

The island location of GB creates a unique challenge for the power system when compared to its continental European counterparts. This shows in the increased balancing needs to maintain system stability. The need for flexibility is disproportionally larger when compared to highly interconnected systems.

The GB power system has demonstrated that carbon reduction by overhauling the generation mix is possible in a very short time. The introduction of a carbon floor price and clean air legislation has reduced the use of coal power plants by five-sixths in the last 5 years. At the same time, significant amounts of wind, solar and bioenergy have entered the power system and gas generation has seen a renaissance. Nuclear power has maintained its share of the mix in the past decade. However, based on current projections, it is likely that replacements will not outweigh closures in the coming decade. Figure 2.2 shows the generation share and total generation of all (major) generation types for the last 9 years. The analysis is conducted at GB-level as Northern Ireland is part of the power system of Ireland.

Figure 2.2: Development of the generation mix and total power generation between 2009 and 2017.

These changes have led to a redistribution of generators around Britain. The closure of coal power plants nearer to the load centres in England and Scotland on the one side has been offset by the construction of renewables in Scotland, the South West of England and Wales. The total installed capacity of renewables is highest is Scotland and Wales, with a relatively homogenous distribution of renewable capacity through England.

The West Midlands, the North East and London stand out as having little generation capacity, due to population density and resource availability. A similar picture is visible when looking at the installed capacity of renewables per capita where Scotland and Wales are leading and equal in value. Both have about twice the capacity installed as the rest of Britain, which raises a challenge for the grid to cope with the redirected flow of electricity and may require investments.

Figure 2.3 shows distribution of power stations by generator type. The last remaining coal stations are located in Yorkshire, the Midlands, the North West and Wales. These stations are due to be closed no later than 2025, apart from Drax power station in Yorkshire, where four of its six units have been converted to use biomass instead of coal. The energy system transition will alter the location of power stations and a redistribution of economic activity and employment in the country. This raises the question how to best facilitate the energy system transition, not only in terms of energy system issues but also economic development and employment. Retaining large parts of the workforce through conversion or the investment in renewables may help to ease the transition.

Additional discussion on the topic can be found in 2.2.

Previous closures of coal stations in the West Midlands have left the region almost entirely reliant on electricity imports from other regions, due to the lack of local renewable generation capacity. Conversely, Scotland invested heavily in onshore wind before its thermal fleet were retired. This makes Scotland a substantial exporter of electricity. Wales hosts large hydro power stations (legacy renewables), masking the relatively slow progress of its energy transition.

The installed base of renewable energy sources (RES) shows a concentration of biomass generation in Yorkshire and the North East. Solar power is predominant in the South West, South East and East Anglia. Onshore wind is mostly deployed in Scotland whereas offshore wind on the other hand is more evenly allocated around the coast of Britain and closer to the load centres, mainly connected to England. Generally speaking, wind and solar follow the resource availability within a tight framework of planning permission. Due to the topography, hydropower and pumped-hydro storage can only be found in Wales and Scotland and not in the rest of the country.

Figure 2.3: Location of power generation in Great Britain. Energy to waste plants are grouped with biomass.

Non-renewable thermal generation (coal, gas and nuclear) is more concentrated than renewable generation. Gas stations are more widely distributed throughout the country and located closer to the load centres. Coal is now restricted to central

England and Wales. Nuclear power stations are all located on the coasts due to the volume of cooling water intake and security considerations.

Interestingly, the West Midlands and Greater London no longer have any large scale thermal generation. The transition from coal to gas fired power stations sees a shift away from typically slow-ramping base load power plants to more flexible (combined cycle) gas turbines, fewer operating hours for the residual generators and variable output over time.

2.1.1 Carbon intensity

The reduction of coal has led to a strongly decreasing carbon intensity of the produced electricity between 2009 and 2018. This is due to the lower carbon content of natural gas when compared to hard coal.

The carbon intensity of grid electricity peaked in 2012 at 508 g/kWh and has since more than halved to 237 g/kWh. This change came at a remarkable speed after the introduction of a carbon-floor price of 18 £/tCO₂ transformed the economics of coal power stations and enabled their rapid phase-out.

Further increases in the CO₂ price are likely to be necessary to build momentum on further decarbonisation of power generation.⁵ Despite this, the shift towards low carbon technologies is likely to be more challenging and not as rapid as the phaseout of coal. Further decarbonisation will require building new generators rather than simply redeploying existing ones.⁶ A recent uptake of the European carbon price (EU-ETS) to over €20 (£18) per tCO₂ should provide a stable environment outside the country-specific carbon floor price policy instruments.

Figure 2.5: Barometer for grid electricity carbon intensity

Additional policy support is required to keep the rate of decarbonisation at the same pace. For example, the application of carbon capture, utilisation and storage (CCUS) technology to capture CO₂ emissions from gas-fired and biomass power plants^b is still in its infancy. The need for decarbonisation using CCUS has seen a renewed support commitment in the Clean Growth Strategy⁷ by the Government as well as from private entities, albeit timings are tight to deliver at scale in 2030s for large CO₂ reductions.

Despite the rapid success of decarbonisation, additional effort is necessary as further decarbonisation will be more challenging^4,c. The rapid progress in the last five years makes up for the previous decade of zero progress on decarbonising electricity. Britain is therefore just about on track – but emissions must continue to fall at 7.5% per year.

There are many technologies for achieving this, wind, solar, biomass, new nuclear build, and power stations equipped with carbon capture use and storage (CCUS). To keep further decarbonisation affordable it is necessary to assess the suitability of all low carbon generators, based on their levelised cost of energy as well as the system integration cost, including those technologies that do not receive policy support at the moment.

Figure 2.6: Development of carbon intensity of the electricity grid in Great Britain.

2.1.3 Storage

In total 3.7 GW of storage is active in the GB power system, of which 2.9 GW is pumped hydro, 0.8 GW is batteries (primarily lithium-ion), 0.4 GW is mechanical (flywheels) and the rest is thermal storage (liquid air and hot water storage).

Batteries and other modern storage technologies are still dependent on specific market rules for economic viability. With the recent increase in RES penetration and the goal to reduce thermal ‘must-run’ capacity for the delivery of ancillary services, National Grid has encouraged demand-side response (DSR) and storage to participate in the ancillary services markets but still finds itself overwhelmingly dependent on thermal generation.

Figure 2.8: Barometer for storage deployment.

The GB power system has less storage than most neighbouring countries due to geographical constraints. Until the mid-2010s the only economical storage technology was pumped hydro which requires mountains, and thus is concentrated in Wales and Scotland. These still make up the largest share of storage capacity. The recent and rapid cost reduction in other storage technologies means that new systems are becoming more widely deployed, with small scale, rapid dispatch lithium-ion batteries contributing the largest share of the new market entrants.

2.1.4 Network and transmission capacity expansion

Grid expansion is necessary to transport electricity between the locations of generation and consumption. Generator locations are changing due to the shift from fossil to low-carbon generators, but this also changes the generation pattern away from a more constant use of transmission lines towards more intermittent utilisation.

Regionally the grid connection reinforcement needs differ largely. The East of England faces a five-fold increase in grid capacity which is needed for the transport of electricity from offshore wind farms to the load centres in the region. The grid in the North East will need to triple its grid transmission capacity by 2040 to cope with the increasing amount of Scottish wind power as well as the possible connection of offshore wind farms in the near future. Yorkshire will have to double its capacity for the same reasons.

Figure 2.10: Barometer for transmission capacity.

The East Midlands has the second highest transmission capacity and therefore does not require the rapid growth of other regions further north. Large parts of today’s grid congestion in Great Britain happens in Scotland, with grid reinforcement requirements. Additionally, potential future nuclear power plants could increase the grid congestion already happening in Scotland. The siting of wind turbines at the best wind resource locations does not coincide with pre-existing location of the grid which lead to frequent grid congestion due to under-sizing of the grid.

There are significant risks to the expansion of the electrical network. For example, it may face the risk of opposition from local residents and tackling such challenges is a major societal task if we are to proceed with a low-carbon transition in the power sector.

2.1.5 Smart meter roll-out

The availability of smart metering is seen as one of the key enablers of a smarter and more balanced grid through the uptake of small-scale demand side response (DSR). A country-wide roll-out of smart meters is envisaged by 2020. This target is conditional, in that every property needs to be offered a smart meter by 2020 but the owners are under no legal requirements to accept.

Varying success can be observed in the rollout, with Wales leading and London lagging.

Possible reasons for this may be socioeconomic effects (e.g. tenancy structure) and technical challenges (e.g. access to meter).

The target for a complete roll-out by 2020 will not be met without rapid acceleration. Only a third of households currently have a smart meter. The current pace would not see roll-out finishing until towards 2040. This would prevent the uptake of time of usage tariffs with higher temporal resolution (e.g 30 minute settlement periods) and domestic DSR services in the near future. This could have knock-on effects such as increased costs for the consumers.

Various challenges are faced by the roll-out. Some are related to use of different types of smart meters, with some of them “smarter” than others, boasting additional functionality between the three types of smart meter – AMR, SMETS1 and SMETS2. The Automated Meter Reading (AMR) is a legacy infrastructure for larger electricity customers. SMETS1 is the first generation smart meter with reduced functionality (e.g. not working after supplier change without intervention) SMETS2 is the latest generation, with connection to the smart meter gateway. Currently, there are only a few use-cases for smart meters and a lack of offerings from the electricity suppliers. The initial vision that smart meters will enable DSR services to the grid has yet to fully materialise at the domestic consumer level.

Figure 2.11: Barometer for smart meter roll-out.

Non-domestic smart meters account for about 1% of the total numbers. However, the installed capacity behind those meters is much higher and likely to be more readily available to provide DSR services.

2.1.6 Demand side response

Demand side response (DSR) could enable buildings to intelligently reduce their demand at peak times, mitigating the need for additional power generation capacity. DSR services at the domestic level are mostly limited to legacy Economy 7 (and 10). The electric loads of a typical household in Britain with gas supply for heating usually do not warrant the aggregation in DSR schemes; the loads are just too small to be economically viable.

Some energy suppliers now offer ‘smart tariffs’ for households with electric vehicles and heat pumps. These first market entrants, however, do not make full use of the smart meter infrastructure. DSR activity that couples these together may at first be limited to smart charging, rather than responding in real time.

Further cost reductions in ICT infrastructure and integration of car-based and personal device communication plus aggregation means that we are likely to see domestic DSR developing. The ongoing digitalisation could see the use of artificial intelligence (AI) to predict users’ behaviour and adjust the energy consumption without a noticeable interruption for the consumer. The use of smart meters may reduce the costs for the consumers when DSR services are provided. However, this will be further down the transition pathway as currently economic benefits are negligible.

FIGURE 2.12: BAROMETER FOR DEMAND SIDE RESPONSE

On the industry and commercial side, DSR aggregators are active in the market.

The high cost of communication infrastructure still makes them reliant on the high value and low volume opportunities, such as frequency response markets. Currently about 2300 MW of DSR is reported to be participating in various markets. This constitutes an over-achievement with regards to the targets laid out by National Grid. However, there is uncertainty whether the reported capacity is correct; the same physical units can be accredited in different ancillary services markets and may be double-counted. If this is the case, it would prove that actors are optimising their participation in the market and reacting to price signal as intended.

Ultimately, the DSR potential with industrial and corporate consumers is high, but it takes a compelling business case to exploit it. As DSR must compete with other flexibility options, saturation may be reached at lower single-digit GW levels due to diminishing returns in the market and increasing effort of connecting consumers at decreasing unit sizes. For price-sensitive industrial and commercial DSR providers, this saturation will happen where the cost of connection and potential gains offset the risk of e.g. lost production in the factory. Increasing awareness of the benefits of DSR, decreasing connection costs and higher intermittency will change this equilibrium and add additional capacity to the system.

2.2 Implications of a transitioning power sector

Overall employment in the conventional energy sector has been steady at around 175,000 since the mid-1990s, after a large decline as the phase-out of coal mining cost more than 300,000 jobs. Around 80,000 jobs are directly associated with nonrenewable electricity generation in recent years.

Figure 2.13: Employment in the non-renewables energy industry.

Domestic buildings are a high-carbon sector due to heating. 83% of household energy is used for space and water heating. For economic and environmental reasons this is clearly the area to focus upon.

Domestic energy efficiency is lagging behind targets and non-domestic energy efficiency targets do not exist.

Scotland benefits from the largest share of high energy efficiency houses whilst Wales has the poorest performing housing stock. This has a large effect on energy bills, especially with electric heating, which can have significantly higher costs than oil or gas. Low energy efficiency is also linked to fuel poverty. However, this correlation is hard to see with the averaged out regional data.

Fuel poverty has been fairly even across Britain, but it is generally more prevalent in northern regions than southern ones, matching the trends in household income.

Few low-carbon heating systems (e.g. heat pumps) have been installed so far. Large deployment targets to 2030 will require a very rapid scale up. This will affect the cost of energy for each region differently, depending on the housing composition.

Electric heating is generally more expensive than on-grid gas and oil at current prices. Changing heating technology is capital intensive and is much more achievable in non-rental housing unless the right policy conditions are in place, putting more stress on low-income households that rent.

Southern England and Scotland spend the most on domestic energy. However, northern England and Scotland spend more of their income on energy than in the south. The difference in average spend by local authority area varies by approximately £750 per year.

Extreme electrification in the future could benefit energy spend in Scotland and the South-West, while increasing costs for midland and northern regions of England.

There are already high levels of electrification in non-domestic buildings. The South of England is the most electrified part of Britain in this sub-sector.

London and the South spend less on energy relative to Gross Value Added, making companies in these regions less susceptible to changes in the energy system.

Figure 4.1: Progress towards transforming Britain’s buildings, highlighting the areas that are under- and overperforming
relative to near-term targets for decarbonisation. Each area is reviewed later in this section.

4.1 Overall buildings current status and future targets

The energy transition in buildings is primarily driven by the cost of energy and climate policy. The sector has seen many initiatives (e.g. Green Deal) over the past decade to facilitate the reduction of demand, with the aim that these will bring lower energy bills and lower GHG emissions. There are two main sub-sectors within buildings: domestic and non-domestic, the latter comprising of commercial and public buildings but not industrial or agricultural buildings. Electrification in buildings currently makes up about 35% of total consumption (see Figure 1.3). There is a large difference between the buildings subsectors. Commercial buildings utilise electricity for approximately 50% of their energy use, whereas domestic buildings only use just above 20%. Public buildings are only slightly more electrified at just below 30%.

The direct GHG emission reductions in all buildings are on track to achieve the 2030 target. For direct emissions, reductions are either achieved by reducing consumption of energy (outside of electricity) or fuel switching to electricity. The factors affecting these methods are investigated in the following sections, where domestic and non-domestic buildings are considered separately.

Towards a 2030 future, a combination of a change to low-carbon heating technologies and increasing energy efficiency will drive a reduction in direct GHG emissions from this sector. Electrification of heating is one method to achieve

decarbonisation in buildings – shifting the emissions burden from the buildings sector to the power sector. Although a viable option, the economics and practicalities of electrification for heating versus a range of other low-carbon options, such as hydrogen and biomass is still unclear. The exact individual contributions of each of these technologies to a low-carbon buildings sector will become clearer through the 2020s, where policies will be implemented to reach climate targets and rapidly falling costs of renewable generation technologies. The electrification through heat pumps is forecasted to become common place throughout British homes, with a predicted 1 in 12 households utilising this technology in 2030. At the same time, this will be supported by an energy efficient housing stock, with approximately 3 out of 4 houses having an Energy Performance

Certificate above a band C. This improvement will help to lower consumption, reducing energy bills or soften any possible increases in the cost of heating through alternative technologies and fuels.

The lack of available data and targets leave the future energy transition in buildings unclear, with even the current state of energy in buildings being relatively difficult to determine, when compared to other sectors. This is particularly evident in nondomestic buildings, where little information on the sub-sector’s progress exists.

Elevated levels of heating electrification in non-domestic buildings is likely to be a good option for further decarbonisation, although increases in commercial energy spend may affect businesses in some region more than others.

4.2 Current status and future targets for domestic buildings

4.2.1 Domestic GHG emissions

The reduction of direct GHG emissions from domestic buildings is on track. Direct emissions reductions have mainly been achieved through reducing consumption by increasing energy efficiency and by switching heating to cleaner fuels or to electricity (where it is then accounted for in indirect emissions – the power sector).

These options have been supported by government policies aimed at increasing energy efficiency (e.g. Energy Company Obligation) and low-carbon energy technologies in homes (e.g. through the Renewable Heat Incentive).

Figure 4.2: Barometer for direct GHG emissions from domestic buildings.

Heating (space and water) dominates domestic energy usage, accounting for over 80% of total domestic building energy demand. Lighting and appliances are 100% electrified, whereas cooking still uses fossil fuels in many homes but can be electrified with relative ease4. Heating (water and space) is predominately achieved through the combustion of fossil fuels but electric replacements are usually less straightforward and can be more expensive. Most of the economic and environmental savings in domestic buildings can be achieved by increasing their thermal energy efficiency and/or by switching heating technologies and fuels. There is potential of decreasing direct emissions further through electrification of heating (or other low-carbon options). However, the additional (indirect) emissions could result in an overall net-increase if power sector does not decarbonise fast enough. The following sections now focus on these efficiency and heating technologies measures, as well as their socio-economic implications.

4.2.2 Energy efficiency

The Energy Performance Certificate ratings of buildings is currently behind where modelling predicts it needs to be. Although, it is within 90% of the 2018 target.

A high proportion of the emission reductions required to reach the CCC 2030 GHG target is apportioned to energy efficiency measures. Total buildings GHG reductions by 2030 must be 26% for domestic and 21% for non-domestic users. This emphasises the importance of energy efficiency measures to achieve the overall targets.

Figure 4.3: Barometer for energy efficiency by Energy Performance Certificate (EPC) ratings. Top: national progress; Above: regional progress.

4.2.3 Fuel Poverty

Poor energy efficiency in homes is often linked to fuel poverty, as household bills can become too high to maintain a level of comfort. 11% of households in Britain are fuel-poor. There is small (approximately 5% at the most) variation in the proportions of fuel poor homes in each region. Although,
it is important to note, even these small percentage changes means thousands or even tens-of-thousands of homes.

For fuel poverty an interim target was not included, as the eradication of fuel poor homes as soon as possible should be the objective. The political nature of this metric means that there are no milestones available for 2018. Therefore, the status of fuel poverty in Britain was deemed to be not on-track.

The Devolved Powers calculate fuel poverty through different methodologies. In Figure 4.5, the results are shown using the low-income high-cost methodology (LIHC), which is used by England, but applied to Scotland and Wales. However, using one methodology to calculate fuel poverty that is consistent and comparable between all the Devolved Powers would be useful for effective policies and measurement of progress.

Using the national-specific methodologies, Scotland has a 34% rate of fuel poverty, and Wales 23% – significantly higher proportions than those identified by the LIHC method. This is important as it dictates how many households get additional funding, but does not give a consistent comparison across Britain.

Other factors linked to fuel poverty are usually income and the ownership status of the property – whether it is let to a tenant or owned by the occupant. The restrictions of upgrading a let property means that the tenant may not be able to implement any improvements; landlords do not gain enough value themselves to implement the measures and vice versa for the tenants. 38% of homes are rented, meaning large proportions of the population are subject to these restrictions.

Barometer for fuel poverty.

Scotland, although having higher energy efficiency, has a mid-range value for proportion of fuel poor homes when compared to the rest of the country in the LIHC method. This could be caused by the low average income per household in this region as well as climatic factors. There are generally higher fuel poverty rates in the northern and midland regions of England and also Scotland, supporting the income per household and climatic variation reasoning. The averaging of household income and fuel poverty rates across a region like the South West could be masking information about the spread and difference in wealth. There are large areas of relative poverty in the South West and this could also be driving the fuel poverty rate in this region.

Similarly, the highest proportion of fuel poor homes seen in the West Midlands could also be affected by the same reasoning of that in the South West. The Midlands and the northern regions of England have some of the lowest shares of homes with EPC ratings C and above, suggesting that this negatively affects the share of fuel poor homes in this region negatively. However, the West Midlands, although having the highest fuel poverty rates, also has one of the lowest proportions of homes with EPC rates F and G (the lowest ratings). This confirms that although poor energy efficiency is linked to fuel poverty, there are other factors in these regional averages that have a significant effect on the levels of fuel poverty.

4.2.4 Electrification of heating

The electrification of heating is one option to potentially reduce the climate impact of energy use in homes. Heating is currently 8% electrified and on-track to reach 2030 target.

However, whether electrification of heating will reduce household energy bills depends on many factors, including the efficiency of the heating technology; the price of electricity; and the efficiency of the home.

In GB, over 75% of households are connected to the gas grid. The use of efficient boilers in homes connected to the gas grid has helped see emissions reductions. However, further decarbonisation with gas combustion technology is highly limited, raising questions on what technology will proliferate in a low carbon energy transition. The future of heating is still under debate; the main options touted are electric heating, biomass and hydrogen, with varying degrees of hybridisation and co-existence. Electric heating (e.g storage heaters) is not a new technology.

Barometer for electrification of heating. Top: national progress; Above: regional progress

However, there are questions over the efficiency and affordability of these older technologies given the current electricity price (higher when compared to gas and oil) and the efficiency of the current housing stock. Newer technologies are considered viable, notably heat pumps, claiming high efficiencies, potential heating bill decreases and fewer carbon emissions. There are two types of heat pumps: airsource (ASHP) and ground-source (GSHP), where GSHPs have higher efficiencies but require larger amounts of land and are more costly to install. As with all electrification technologies, emissions depend on the carbon intensity of the power system and would be accounted for in the power sector, reducing buildings’ direct emissions.

4.2.5 Heat pump deployment

The CCC model that 2.2 million heat pumps should be deployed by 2030, rising to 5.8 million by 2035. This assumes a cost-optimised deployment rate of over 400,000 heat pumps per year in 2030, and 900,000 per year in 2035. For context, Britain installed approximately 6,500 heat pumps last year.

Scotland and the South West are ahead of target deployment of heat pumps, whilst all other regions are behind. This is likely because the installation of heat pumps is most attractive (practically and economically) in areas with high off gas-grid houses. London is only at 5% towards its 2018 interim target.

Heat pumps deployed in 2017 totalled 40,989 units (31,882 as air-source heat pumps (ASHP) and 9,107 ground-sourced heat pumps (GSHP)). According to CCC modelling, to achieve climate targets, there should be should behave been 65,000 heat installed by 2017, therefore suggesting current deployment is not on target. The current installation rate of approximately 6,500 per year is much lower than the modelled 28,000 per year in 2017. Heat pump installation is expected to ramp up during the 2020s and any delay could be compounded, making targets difficult to reach.

Barometer for heat pump deployment. Top: national progress; Above: regional progress.

The overall percentages of low-carbon heating are very low and even lower for just heat pumps. This shows, when compared with the electrification share in Figure 4.6, a very small proportion are these efficient electrical heating technologies and will instead be utilising less efficient technologies such as storage heaters. This will have a negative effect on the cost of energy for those areas with high (inefficient) electrification (see section 4.2.4).

4.3 Implications for household consumers

This section extracts some of the socio-economic factors of the current energy system for buildings and suggests a view of what a future may look like with further transformation.

4.3.1 Household energy costs

The current energy system outlined in the previous section results in the costs to domestic consumers shown in Figure 4.8. Household spend was calculated by using electricity and gas retail prices per region; fixed yearly electricity and gas cost per region; electricity and gas consumption by local authority and number of houses per local authority.

The regional map shows that household costs, on average, only vary by ~£180 across GB. Scotland and the South-East have the highest prices. However, at local authority level, there are variations of over £1000 in household energy spending.

The energy spend in central London is very low (~£800) whereas on the outskirts into the South East the costs can be almost twice as high. This is likely related to the types of housing in each are, with central London featuring smaller flats and terraced housing compared to larger detached properties of the South East. Low costs are also seen in mid-Wales and along the East coast of England, particularly in Yorkshire and the Humber and the North East regions. Wales has a high proportion of off-gas grid homes but does not have a high penetration of electric heat. The northern regions in England have high share of on-gas grid properties and therefore benefit from low cost heat.

^{Figure 4.8: Average household spend on energy by region and local authority.}

The Highlands and the particularly the West coast of Scotland are high energy spend regions, which correlates with a high level of off-gas grid homes using electric and lower average temperatures.

The share of income spent on energy increases outside of London, the South East and East regions (Figure 4.8). The higher income regions spend a smaller proportion of their income on energy as the difference in energy spend between regions is small but the difference in household income is much larger. Generally, the energy spend as a share of income is higher in Scotland than it is for England and Wales.

4.3.2 Changes in household energy costs

To see what the implications of further energy transformations in buildings could look like, a future with high low-carbon heating uptake was modelled. It was assumed that all ‘standard’ on-gas grid homes use gas boilers and all ‘standard’ off-gas grid homes, that are not electric or biomass already, use oil boilers. There is also a carbon price incorporated in the future heating costs. The results show that low-carbon options can be cheaper for off-gas grid homes compared to those on gas-grid (Figure 4.9).

Figure 4.9: The levelised cost of alternative heating systems in 2030 and 2050 relative to gas boilers (left) and oil boilers (right).

A change in average energy spend per home by region to 2030 is shown in Figure 4.10 for each of the selected new low-carbon technologies. Further explanation of the calculation and assumptions is detailed in Appendix 3.

In general, a full-switch to a low-carbon technology could significantly increase energy spend, even with the carbon pricing included in these cost estimates (Figure 4.10). This increase ranges from 20% for ASHP and biomass technologies to over 70% (and potentially) 100% for GSHP and conventional electric technologies.

Overall, ASHP is the cheapest low-carbon option for all regions under these parameters. Biomass is more expensive but competitiveness and costs may vary regionally. These costs assume that there are no efficiency upgrades, keeping the heat demand constant. However, the additional cost of running electric or other alternative heating technologies would benefit from energy efficiency upgrades to homes.

Figure 4.10: Average change in household energy spend from installing new low-carbon technologies. 0% implies no change when moving from a gas boiler. ASHP = Air Source Heat Pump. GSHP = Ground Source Heat Pump.

With a focus on ASHP as the cheapest option, Figure 4.11 visualises how the energy spend will change by region as the system is transformed through removing natural gas and oil heating completely, applying carbon pricing and electrifying through ASHP.

This gives an indicative view of how energy spend will change through technology changes. Scotland and South West look to benefit from the assumed switching, with regions in the north of England being worse off. This is mainly due to the current level of spend on energy, with northern and midland regions of England having strong gas-grid connection, providing a cheap heating option; the switch to ASHP for these regions makes it more expensive. In Scotland and the South West, there are currently a lot of off-gas grid homes utilising oil boilers. The switch to ASHP in these regions results in cheaper energy bills, when considering carbon pricing up to 2030.

Apart from the GHG reduction target, very few targets exist for non-domestic buildings. This further reflects the relatively slow progress towards emissions reductions in the non-domestic building sector.

Figure 4.12: Barometer for direct GHG emissions in Non-domestic buildings.

4.4.2 Energy usage in non-domestic buildings

The current status of energy supply to non-domestic buildings can be seen by using electricity and gas meters as a proxy (Figure 4.13).

Non-domestic buildings in South England, Scotland and Wales are more highly electrified than the northern regions, meaning the latter’s commercial and public sectors are more susceptible to changes in electricity prices. Further electrification of this sector would result in direct emissions reductions, however, this would only result in overall emission reductions if the power sector carbon intensity targets are reached. The cost of this electricity depends on the technologies in the grid mix and the supply-demand balance of electricity. Possible rises in electricity costs in the future leave the highly electrified regions more open to cost increases. However, if strong carbon pricing is implemented the same could happen to the regions with low-electrification.

Figure 4.14: Final energy consumption in 2016 of Public, Commercial sub-sectors and the total non-domestic sector, as a % of total energy consumption by (sub-)sector.

There are large proportions of non-domestic buildings without gas meters. However, public (yellow) and commercial (red) buildings used as much electricity as natural gas in 2016 (43.8% and 43.4% share of primary energy consumption, respectively). This shows that those buildings with access to gas have high gas consumption. Public buildings used more gas than electricity; the opposite is seen in commercial buildings. It is assumed that public buildings are in general older buildings with lower heating efficiencies that are more likely to be connected to the gas grid, therefore require high gas demands. Commercial buildings are more likely to use air conditioning and electric heating units to satisfy their heating demands. The average for the non-domestic sector (orange) varies by application and is always between the public and commercial share.

4.5 Implications for business costs and competitiveness

The characteristics of the regions’ commercial composition and the energy system can have implications on the competitiveness of businesses in the region due to commercial and public sector costs. Spend on energy as a proportion of the region’s Gross Value Added (GVA) was calculated (Figure 4.16). All commercial and public activities were included in the GVA.

The regional barometers in each section of this report have shown the status of Britain’s regions in transforming and future-proofing their energy systems. These results have been summarised for each region in Figure 6.1. The same methodology is used for the regions as is used for each sector: counting the number of metrics which are pushing ahead, within 90% of the target, or not on track. The following sections summarise the progress and impacts of transforming each region’s energy system.

Figure 6.1: Overall indicator for how transformed the energy system is in Britain’s regions.

The sections below are ordered based on the ranking of how well each region is progressing. The data required to build a regional indication of the industrial sector was not available, thus industry is excluded from this chapter. This does not mean there are not specific regional impacts that come from transforming the energy supplied to Britain’s industry, for example the vehicle manufacturing in the West Midlands or the energy intensive industry in Tees Valley.

In Sections 3 and 4, this report calculates the total cost of ownership of modern electric vehicle and heating technologies, and the gap between them and their conventional counterparts. Figure 6.2 combines these to give the total additional cost a household in each region could expect to face for electrifying their heating and upgrading to an electric vehicle.

Figure 6.2: The annual additional cost of electrifying heat and transport in each region, measured as the total cost of ownership (TCO) gap between electric and conventional technologies. For heating, the cost is based on conversion from gas boilers where possible, and from oil boilers in homes off the gas grid. For vehicles, the cost is based on conversion from the regional share of petrol and diesel vehicles.

London stands apart from other regions because the unique characteristics of its transport networks (the Congestion Charge, and people driving fewer miles per year) mean the lifetime cost of owning an electric vehicle is on par with petrol already. In all other regions, there is still an appreciable cost barrier to uptake of electric vehicles.

Outside of London, there is a 30% spread in the cost gap, which ranges from an extra £840 per year in the West Midlands up to £1,100 per year in Wales. The regions which face smaller additional costs from electrification are generally those in the top half of the progress league table (Figure 6.1), and those with the highest costs are generally falling behind. This shows that the individual regional characteristics, especially socio-economic factors, are critical to the fair and equitable transformation of Britain’s energy system.

6.1 London

London has progressed the most of all Britain’s regions in terms of energy transition. A strong driver in the region is the electrification of transport. London’s power system is characterised by having no large generators. The urbanised nature allows for solar photovoltaics, although uptake is low at present.

As London does not expect growth in generation capacity, the power grid does not need to be expanded at regional borders, but reinforcement may well be necessary on lower voltage levels within the region to account for electric vehicles. Overall the region is driven and characterised by its energy consumption and not generation.

London has relatively high EPC ratings, although not as high as Scotland and the East, and has the lowest levels of F and G ratings. London is midrange in terms of fuel poverty, but high when compared to surrounding regions. This is most likely due to the demographic and socioeconomic structure of the southern regions. The housing structure has a higher electric heating rate than the rest of the country, due to the high proportion of electric heating for off-gas grid homes. Despite this, there are very few low-carbon heating installations in London.

With the transport sector, London shows the greatest decrease in absolute and relative emissions. This is likely related to efficiency gains in public transport, increases in active travel and decreases in road kilometres driven. In London, where public transport, walking and cycling make up a greater share of the modal split, the emissions per person from transport is about 1 tonne of CO₂e per year. In every other region, commuting by private car dominates, and so residents emit 1.5 to 2.5 times that of Londoners.

London has the highest number of electric charging points. Hydrogen refuelling stations are even more strongly clustered within London; fewer than half of the stations are outside the capital. The region has the greatest number of ultra-low emission buses as TfL’s commitment to electric and hybrid buses has led to rapid uptake. Air quality issues are one of the main drivers of this development. London has seen the greatest increase in the number of electric/hydrogen buses, with an over 15-fold increase between 2013 and 2018. Overall, London has the lowest emissions from diesel usage in rail, due to higher rail electrification in the area. London as the only purely-urban region has by far the greatest number of bus stops per square kilometre, allowing for a modal share that is not dominated by private cars. This allows London to transition faster and more effectively, which will reduce travel costs in future.

The average distance driven by each vehicle is substantially lower in London than any other region, thus giving London the lowest total cost of ownership. London’s Congestion Charge – an additional tax – is not applicable to plug-in and hybrid vehicles, giving a substantial incentive for electric vehicles. TfL report that an average vehicle makes 8 trips vehicle per year into the congestion charge zone (assumed in this study); however, if a vehicle were to travel every working day into the zone, this could increase the cost of petrol and diesel cars by up to £3,000 per year, which would further improve the total cost of ownership for plug-in vehicles in comparison. London is the only region in Britain where total cost of ownership for battery-electric vehicles is lower than petrol or diesel. London has a low ratio of number of EVs per available charging point, linked to having a higher proportion of EV chargers and/or a smaller (absolute) number of EVs.

It is clear that railway spend was focused on London, receiving almost 45% of the combined funds from national government, local authorities and private organisations. Further, almost a third of central government railway spend went to London, which alone is greater than the spending from all sources in any of the other regions. Interestingly, spending correlates to the share of electrified network within the regions, putting London, South East, North West and Scotland at the top.

The additional cost of using a heat pump and electric vehicle amounts to ~£60 per year in London. This is mainly driven by the additional cost of in electric heating, as opposed to other regions where the cost increase in driven mostly by the increased BEV costs. London is on the cusp of having modern electric technologies reach cost parity with incumbent fossil fuels.  The additional costs in London are substantially lower than in any other region.

6.2 Scotland

The Scottish energy system really stands out from the other regions. It is leading in several areas and acts as an example for the energy transition to come in other regions. Scotland has fully met half of the targets laid out in this report, joint first with London.

Scotland has the highest installed power station capacity, as well as the highest share of renewables of all regions. Onshore wind power dominates the generation mix, as this region offers an exceptionally good wind resource and low population density. The large increase in wind power generation has offset the phase-out of coal and gas, and the future closure of nuclear power. The wind industry enables Scotland to generate new employment and create an alternative for the oil and gas industry. Scotland has the largest number of jobs in renewables of all regions with the potential to continue growing as the transition continues.

However, more recently political uncertainties about the future of onshore wind have arisen, which may stop economic development in that area. Simultaneously, there is considerable uncertainty for potential future nuclear power plants, as these would increase the grid congestion already prevalent in Scotland. The siting of wind turbines at the best wind resource locations does not coincide with pre-existing location of the grid, which was built out many decades ago and not designed to cope with large amounts of wind power. Locally congested electricity from wind power can lead to opportunities for local smart energy solutions and sector coupling of the electricity, transport and industrial sector.

On the buildings side, Scotland has a relatively energy-efficient building stock with the highest proportion of EPC ratings above C. At the same time, a relatively high proportion of households live in fuel poverty: 11.8% using the English low income high cost (LIHC) method. One reason for that might be due to Scotland having the highest proportion of electric heat (12.2%) with Highlands reaching 20–25%. This corresponds to similar proportions of off-gas grid properties in these areas. 55% of Scotland’s off-gas grid homes are electric, the highest proportion in Britain. The average energy spend is second-largest in Scotland (largest in South East), with some areas spending £600 more per year when compared to British average. The average Scot is spending approximately 3% of disposable income on energy. This situation has been identified, and led to the largest deployment of efficient and low-carbon heating (0.52%, or 12,300 units). This aims to address both climate change and fuel poverty issues by increasing efficiency, which makes Scots likely to be better off in the future. However, this strongly depends on the technology the fuel poor homes are changing from and the energy efficiency of the homes. The economic decision to not build a gas grid has affected consumers negatively and raises questions on possible future de-carbonisation using hydrogen. If heating was changed through the installation of air-sourced heat pumps in the on-gas grid homes and off-gas grid homes (that are not already electric or biomass) change in energy spend would decrease by 3.3% in Scotland or £35 by 2030. This is a very small change in proportion of average household income.

In the transport sector Scotland has the second highest number of electric charging points, only London has more electric vehicle charging points. London, Scotland and the South East have more than half of Britain’s charging points between them. At the same time Scotland has a low ratio of EVs per available charging point, linked to having a higher proportion of EV chargers and/or a smaller (absolute) number of EVs. This means Scotland’s infrastructure is ready for greater EV uptake. Scotland is also second to London in the number of electric/hydrogen buses with an almost 6-fold increase between 2013 and 2018 and amongst the leaders in the proportion of Heavy Good Vehicles (HGVs) that are already electrified or using hydrogen. Regardless of vehicle type, the total cost of ownership is highest in Scotland (and Wales), while it is the lowest in London. This may be affecting the EV uptake in the region. Regionally for battery-electric vehicles and Plug-in hybrid electric vehicles, Wales, Scotland and the North East face the greatest financial burden when owning a vehicle.

The additional cost of using a heat pump and electric vehicle equates to ~£990 per year in Scotland. This is driven solely by the additional cost of BEVs compared to fossil fuelled vehicles, as we project a small saving from switching to ASHP in Scotland, related to the high off gas grid housing stock. Compared to other regions, Scotland has the 5th highest additional costs.

6.3 East of England

The east of England is the third most transformed region in Britain. A five-fold increase in grid capacity is needed for transporting electricity from offshore wind farms to load centres inland. The building of offshore wind farms will contribute significantly to the region’s economy, whilst at the same time reducing the overall transmission length by being close to London. The subsequent increase in employment will have a significant impact on the local economy with building of supply chains around the industry.

The EPC ratings are second highest in this part of the country. The same goes for residential fuel poverty rates. The southern regions effect means that electric heating rates are higher than on average. All of these factors mean that the region has an advantageous starting point for the energy transition.

Regionally, the West Midlands and the East of England are leading the EV uptake. At the same time the charging point density is low for the number of vehicles on the road, a consequence of the successful EV roll-out. The current situation indicates that innovation around smart charging could happen here, especially when EVs are combined with the future of offshore wind power for balancing services. This could lead to significant cost saving for this region.

The additional cost of having an ASHP and owning a BEV is equivalent to ~£970 per year in the East of England. As with most regions, this cost is mostly related to the additional cost of BEVs compared to fossil fuelled ones, with ASHP accounting for less than £50 of the total additional costs. As compared to other regions, the East has the 6th highest additional costs.

6.4 South West

The South West is ranked joint fourth when compared to the rest of Britain. However, this part of the country faces particular challenges. The South West is characterised by its weak electrical connection and remoteness, relatively speaking. Grid congestion is already present and hinders the further installation of solar photovoltaics.

The reductions in feed-tariffs for solar PV has affected the region negatively. It is to be expected that this region will be one of the first to restart the solar boom once the technology can support itself ‘subsidy free’ – due to its relatively good solar resource, compared to the rest of the country.

The buildings have a relatively high rate of EPC ratings of C and above but also a substantial share F and G rated buildings (7.4%). It sees higher fuel poverty than other southern regions, although still midrange. This is certainly due to having the highest electric heating rate outside of Scotland and the highest number of off-gas grid properties and the second most low-carbon heating installations.

Whilst the South West has a relatively large number of EV charging points, there has been a small uptake of EVs compared to the other southern regions. This has resulted in a relatively high proportion of chargers relative to EVs. The gap in total cost of ownership for EVs in the South West is similar to that of the other southern regions but its lower average household income could be stopping the deployment of these vehicles. For other low-carbon transport like buses and HGVs, the South West is lagging behind its targets.

The South West is among the regions with the lowest additional costs (3rd lowest) associated with electrification of heating and transport. This amounts to ~£845 per year, which is entirely from the additional cost of BEV ownership. In fact, as with Scotland, there is a benefit to switching heating
to ASHP, which is again related to the high off gas grid household stock.

6.5 South East

The South East of England is ranked joint fourth. The region has faced grid congestion in the past and the installation of almost 2 GW of photovoltaics has exacerbated the situation.

In response, the region has seen the largest storage capacity for new storage (i.e. not pumped-hydro). The storage is used for grid balancing and innovative approaches to load flow management by the local distribution network to alleviate grid congestion. This will benefit consumers, as their bills will be lower than what they could have been without these measures.

The South East has the lowest EPC ratings of the southern regions but it is still relatively high when to compared to the national average. Fuel poverty is lowest in the country despite having more houses off the gas grid the highest energy bills per household in Britain. This is mainly due to socioeconomic factors and milder winters. This should enable consumers and businesses alike to invest in new technologies and exploit the gains in the future.

The South East is amongst the regions with the highest number of EV charging points. It has high car ownership and private transport is the main mode of commuting. Therefore, there is potential to see large emission decreases through a modal shift or continued electrification of private transport. The region leads on the proportion and absolute numbers of HGVs that are already electrified or use hydrogen. The emissions due to diesel usage in rail are highest in the South East despite high electrification of rail and lowest spend per passenger journey. It is suspected that the large volume of journeys are the cause of this.

The South East has projected additional cost of electrifying heating and transport of ~£940 per year, the 4th lowest among Britain’s regions. As with other regions, this is mostly related to the additional cost of BEV ownership, which accounts for ~£860 of the additional yearly cost.

6.6 West Midlands

The West Midlands ranks as the sixth most transformed region, placing it in the middle of Britain’s league table. The power sector in this region is changing most drastically of all regions. It has become a large importer of electricity in recent years due to the retirement of conventional generation and very little uptake of renewable capacity.

This means that the region is decoupled from the economic activity of the energy sector in Britain and has no value creation and jobs from electricity generation. In future this will make the region worse off in terms of electricity generation than it was just a few years ago.

The region is midrange for most buildings’ metrics, for example in EPC ratings, but had the highest fuel poverty rates between 2012 and 2016, despite low electric heating rates. The combination of imported electricity and high fuel poverty rates means that there may be a challenge in the future.

On the upside, the West Midlands is leading with EV penetration at 0.52% of the car fleet. This growth is likely to be linked to the automotive industry that is present in the region and the fact that the total cost of ownership is the lowest in this region when compared to the rest of the Britain, except for London. The uptake of electric vehicles has also led to a higher EV to charging point ratio, suggesting greater competition for charging in the future. In fact, the regions performance on electric vehicles secures its position in the mid-range.

The West Midlands has the 2nd lowest additional cost associated with heating and transport electrification, behind London.  The total yearly cost of ~£840 is primarily due to BEV ownership (~£760), while the additional yearly cost of ASHP heating amounts to ~£85.

6.7 Wales

The Welsh power system can be characterised by its large pumped-hydro storage capacity and a number of gas-fired power stations in the south. Wales has by far the highest rate of smart meter roll-out of all regions. This will enable consumers in Wales to become one of the first regions to profit from the potential benefits, such as demand response activities.

However, this may be offset by the low income in the region which makes it less likely that the necessary investment (such as electric vehicles and heat pumps) is undertaken on a large scale, unless specific support schemes are provided. This means Wales may miss out on the benefits of its smart meter rollout in the future whilst it has to burden the cost of rolling out millions of meters.

The Welsh housing stock is among the least efficient in Britain. It has one of the lowest regional proportions of EPC ratings above C and with 9% of EPC ratings in the F and G category. This means that electrification of heating could increase overall energy costs. This would negatively affect the region economically and could increase fuel poverty, where it currently holds a midrange position.

Wales has the lowest EV penetration and the fewest charging points, with only 3% of all the chargers being in Wales. This is induced by the more rural setting than other regions and higher driving distances. The region will miss out on the benefits of electric vehicles and could pay a higher price for electrification. Wales has a single electric bus running in Cardiff, which exemplifies the current situation. Wales has the lowest (joint with East Midlands) number of ultra-low emission HGVs and faces the greatest financial burden for battery-electric vehicles and plug-in hybrid electric vehicles. When normalised by the total number of journeys taken in that same year, Wales is amongst the highest investment spend per journey on rail and much higher than the South East of England (i.e. regions East, South East and London). This seems to correlate with the limited electrification in rail and reduces the chances of carbon emissions reduction through a modal shift in the transport sector.

Wales suffers the highest cost associated with transitioning to electric heating and passenger transport. The yearly additional cost amounts to ~£1,100, with ~£1,040 related to the increased cost BEVs and ~£60 related to the increased cost of ASHP.

6.8 East Midlands

The East Midlands is ranked joint eighth in the regional comparison. The power system continues to host a large coal and gas capacity, as well as a significant renewable and electricity storage capacity. Currently, the region has the second highest transmission capacity of all regions. However, a smaller growth rate compared to other regions further north could see the East Midlands lose this second-place ranking. The growth in renewables and existing transmission capacity places the region at a good starting point to undergo an electricity transformation.

The East Midlands has the second greatest absolute number and the greatest penetration of ultra-low emission buses into their fleet. In the East Midlands, the city of Nottingham has been an early adopter of electric buses, having recently purchased a further 13 battery electric buses to join the current 45. The East Midlands have the lowest number of ultra-low emission HGVs. Despite positive movement in the transport sector, there is still considerable changes required to ensure a transformation of the transport sector.

The East Midlands have one of the highest proportions of F and G rated buildings, resulting in part in high fuel poverty rates. Electric heating uptake is low in buildings. Considerable support is required to ensure that both the energy transformation in buildings can occur alongside other regions and that vulnerable consumers will not be significantly financially affected.

The additional yearly cost of using ASHP for heating and a BEV for private passenger transport amounts to over £1,000 in the East Midlands. This is mostly related to the ~£920 additional cost of BEV ownership. The East Midlands therefore ranks as the region with the 4th highest additional cost.

6.9 Yorkshire and the Humber

Ranking join eighth, Yorkshire and the Humber is characterised by its past of being home to several large coal power plants, remaining one of the few regions with active coal power generation, and currently has the second-most installed capacity. Further, as a result of Drax’s conversion of four out of six coal units to biomass, Yorkshire and the Humber has the greatest biomass capacity in Britain.

Projections indicate the region will connect several offshore wind farms, generating employment during the construction and operation phases. This added capacity in the region will mean either greater electricity storage will be required or a doubling of the grid capacity in neighbouring regions. Notably, the region currently has one of the lowest installed capacities in electricity storage, although recent announcements suggest Yorkshire may become a leader in this area.

Yorkshire has seen the greatest growth of all regions in the number of plug-in vehicles, having grown over 200 times its size since 2011, albeit from a low starting point. The region requires more incentives for progress in the energy transition of the transport sector as it would otherwise fall behind the rest of the country.

Buildings in Yorkshire have the lowest rate of EPC ratings above C in the country, with around 7% of buildings rated at F and G. Despite having the second lowest energy bills in Britain, fuel poverty is still high. Strong intervention is required to ensure that the region’s energy transition in buildings is not left behind.

The additional cost of electric heating and transport is ~£950 in Yorkshire.  Of this, ~£880 is related to the additional cost of BEV ownership. This places Yorkshire slightly below average, ranking the 5th lowest cost among the regions.

6.10 North West

The North West ranks tenth, its power system has a rich mix of coal, gas and nuclear power stations, as well as offshore wind power in the Irish sea. Further, the largest wind turbine of the world resides in the newly finished Burbo Bank Offshore Wind Farm, which connects to an onshore substation at Wallasey, near Liverpool.

The North West was also the first region to have liquid air electricity storage, before the facility was moved from Lancashire to Birmingham. The region has one of the highest employment numbers in renewable energy in England, increasing its long-term competitiveness. Despite these progresses in the power sector, the region does not rank highly amongst the other regions in the energy transition of the power sector.

The North West is one of the leading regions for the penetration of ultra-low emission HGVs, both in absolute number and as a proportion of the HGV fleet. This however does not overcome the shortcomings in the other transport, transition metrics. The region requires greater support to ensure that it is not left behind in the energy transition of the transport sector.

Buildings in the North West are characterised by low-midrange EPC ratings. Despite lower electricity prices, the cost of heating still leaves many North Westerners fuel poor, due to overall lower regional incomes. This is generally reflected in all the midlands and northern regions. The transition to electric heating would increase energy bills in the regions, strongly affecting already vulnerable, fuel poor consumers.

The additional cost of electrifying heating and transportation amounts to ~£1,020 per year in the North West. This is mostly related to the additional cost of BEV ownership, which stand at ~£910 per year. The North West has the 2nd highest additional cost, behind only Wales.

6.11 North East

The North East is the least transformed region in GB. The North East’s power system is characterised by its need to triple grid transmission capacity by 2040, with the possibility of connecting an offshore wind farms in the near future. The largest power stations are Hartlepool nuclear power plant (1.3 GW), set for decommissioning in the mid-2020s, and Lynemouth biomass power station (400 MW). Excluding biomass, the North East has the lowest power station capacity in the country except London.

This absence of generation, especially by the mid-2020s means that an investment in wind power could boost local economy and enhance the current the structural changes ongoing in the region. Positively, the region has the second highest smart meter roll-out rate in Britain.

The North East has had the smallest growth in the number of registered plug-in vehicles, with its fleet in 2018 (Q1) being 34 times larger than it was in 2011, which is only half the national growth rate. To compound this, the North East has fewer electric and hydrogen buses than it did in 2010. Based on total cost of ownership calculations, battery-electric vehicles and plug-in hybrid electric vehicles place the greatest financial burden on consumer of the North East. Interestingly, the competition for charging points is amongst the lowest in Britain, meaning the stage is set for greater uptake of electric vehicles. Based on the total number of journeys, the North East invested the most per rail journey in 2017, despite its limited electrification.

The region’s buildings have a relatively high EPC ratings (above C). However, it has the second highest fuel poverty rates, despite having some of the lowest energy bills. There are currently very few low-carbon heating units installed, and our total cost of ownership calculations show that a change to electric heating would increase household bills in the North East the most compared to other regions.

The cost of switching to electric heating and transport in the North East is projected to be ~£1,015 per year.  This is the 3rd highest cost increase across Britain’s regions, and only £2/year behind the North West.  BEV ownership accounts for ~£890 of this additional cost, while ASHP heating accounts for ~£125.  Clearly, efforts to reduce the cost premium for electric technologies in a region with below-average uptake and below-average income could have significant impacts on future progress.