29th March 2019
Purpose: To update Energy Forum Members on Energy Policy Development 21 March 2019
Economic Development introduced the meeting by explaining that Energy Policy is based on four core pillars of policy. PWC has been engaged to act as independent researchers and advisers to assist in the data analysis and formulation of policy development based on likely population trends, hydrocarbon and overall energy demand up until 2050
PWC explained that they had significant energy policy development experience based on his work with UK governments and noted that the key drivers of change for policy development are:
• Population ( size and demographics. Guernsey pop. Is expected to remain between 62k-64k)
• Energy transition ( shift from hydrocarbons to renewables)
• Energy market structure (competitive environment)
• Taxation ( as a revenue generator for States of Guernsey)
• Renewables ( technological developments)
PWC summarised that the impacts of change would manifest themselves at two levels:
• Grid level: with development pf commercial scale PV, Wind and GF1 cable
• Domestic level: PV, EV’s and Thermal efficiency.
PWC outlined how energy policy was adapting to changes in technology , public perception about the environment and the impact that these developments will have on competition, regulation and compliance, as well as the economy and government finances.
Options to manage and support the transition to electrification have been researched in line with a direction to consider environmental taxation measures from hydrocarbons would need to be considered . Needless to say there would have to be a significant Social Policy overlay here to ensure that sections of the community were not disadvantaged unduly.
Key issues for the SoG are with respect to the potential impact the direct GF1 cable may have on energy supply/ N-2 policy, as well as eventual export opportunities
PWC noted that total energy demand ( somewhat surprisingly) was expected to fall from 1300Gwh in 2019 to 900Gwh by 2050, with the contribution to the fall coming principally from heating and transport. Aviation and marine are expected to remain broadly constant, and form a comparatively small proportion of the hydrocarbon volumes. PWC noted that it was expected that hydrocarbons as a fuel source would diminish rapidly as its energy would be replaced by electrically sourced energy from renewables.
PWC expect that there will be 25-40k EV’s by 2050 vs 300 now, with uptake accelerating gradually initially with rapid uptake from early to mid 2020’s.
Economic Development explained that three focus groups had been formed from the general population (non experts), assisted by Island Global Research covering the topics of:
• The Energy Trilemma ( security, affordability, reliability)
• Energy awareness ( of the alternatives/ tech developments)
• Hydrocarbons (trends, safety , economic costs)
“The Four Pillars”
1 Create an open energy market with access to all suppliers ie: a level playing field, which takes account of energy security criteria and which is subject to appropriate regulatory control
2 Create a competitive energy supply market, using shared infrastructure and access to the grid
3 Manage and support change in energy composition to reduce emissions and environmental impact
4 Establish secure supply platforms to enable renewables
Economic Development explained that energy transition is happening quite rapidly and Guernsey has been reacting too, albeit is being driven more by external factors outside Guernsey’s control. The SoG aim to exercise greater levels of control and set the Energy Policy agenda to suit Guernsey’s own needs and create an energy landscape that best fits our requirements. This will be effected broadly along two policy lines:
• Energy transition from a hydrocarbon environment to electrically sourced energy
• Emission based change as a primary driver
Energy Policy Timing
Economic Development explained that drafts of the new Energy Policy are expected to be available internally from May, and consultation externally will occur for a six week period from early July to early August. It is expected to be debated in the States in September after the summer recess. Economic Development would not be drawn on what their expectation of the outcome of the States debate ob energy policy might be.
Overall , there were no real surprises here, and that it is clear that the development of a new energy policy has taken account of multiple views. Thematically, there is a strong recognition that the policy being developed today would not have been possible 10 or even 5 years ago. There is widespread recognition that energy transition from hydrocarbons to other sources , mainly electrically based renewables, is happening globally and that Guernsey will be impacted whether it likes it or not. Policy direction, creditably, is predicated on embracing these technological changes and is being directed in such a way to enable maximum participation and opportunity for businesses and the population in general, as well as to assist in creating an open architecture for change without the constraints of a rigid regulatory straightjacket. Chamber hopes that the policy will be seen by the States as a great opportunity to embrace and encourage change towards a robust and responsible development of the energy industry, and not be seen through the prism of negativity in terms of measuring any implied or actual benefits against the lowest common denominator. Overall current policy development has much to commend it, and embraces many of the policy suggestions that Chamber presented in October 2018 to the consulting panel.