Five challenges to making the energy transition work - and what to do about them

Written By: Amit Gudka
Posted 21 Dec 2023
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At the recent Web Summit in Lisbon, I joined a panel to discuss the obstacles slowing the transition to low carbon energy and how they can be overcome.

I was joined on stage by Marty Neese, CEO of Verdagy which manufactures green hydrogen electrolysers. Together, we discussed what we need to do collectively to accelerate the energy transition - and keep appetite to invest in it high. Over the discussion, we identified five key things we need to get to net zero, at the speed we need to tackle the climate crisis and improve energy security.

1. Accelerate planning and grid reforms to resolve red tape

Planning permission and grid connections. These are two phrases that come up again and again, no matter the country you’re operating in, or the area of the energy transition you work on. It still takes too long to work through planning permissions, secure grid connections, and get infrastructure built. The good news is we’re starting to see reforms on both fronts, like plans announced to incentivise communities to host clean energy infrastructure in the UK or speed up how developers connect projects to the grid.

What we need now is a continued focus on these changes and delivering them - rather than political, regulatory and media attention refocusing elsewhere now that initial reforms are underway.

2. Renew consensus on achieving net zero emissions - a political rather than financial hurdle

The US Government’s Inflation Reduction Act, the EU’s Green New Deal, the UK being the first G20 country to set a legally binding net zero target - support from political parties has generated a wave of pro-energy transition and pro-climate policies. However, that consensus has started to wobble across the world, making net zero a polarised topic. Without consensus, progress on decarbonisation is becoming much harder.

Whether a more concerted effort to focus on the benefits of clean energy or find new ways to reinvigorate appetite for decarbonisation programmes, net zero needs a sustained political shot in the arm.

3. Offer policy certainty if you want to drive investment

There’s no shortage of investor appetite for climate solutions, clean energy and ideas that decarbonise industry. But the one thing guaranteed to dampen interest is political uncertainty.

This is especially true for infrastructure investment. Battery storage sites like ours last decades. So do wind and solar farms (and hydrogen electrolysers, for that matter). Electricity pylons and cables last even longer. So, investment allocated across the sector needs to know it can work over those timeframes. A policy or regulatory environment that looks hesitant, or consistently chops and changes, causes investors to have doubts.

We need a longer-term commitment to decarbonisation in policymaking. Decades, not years. Big-picture thinking across investment cycles - not microscopic changes across parliamentary cycles.

4. Follow through on ambitious targets with rapid action

Ambition is important. It’s the starting point and the inspiration for decarbonising the energy system and reaching net zero.

However it’s action - shovels in the ground, sites getting built, innovations rolling out to market - that’s really needed now as we race to lower carbon emissions, something we strongly believe in at Field. That’s why we’re accelerating the buildout of our pipeline of energy storage sites, aiming to bring several online over the next 18 months. It’s also why we’ve continued to fundraise, so we can scale up our business and bring more sites online, much faster.

We need similar action from as many actors across net zero as possible: political action to overcome barriers like grid connection queues; investor action to back companies deploying mature technologies at scale, and develop new ones for the future; and societal action to support companies and politicians wanting to do both.

5. Make the case for the energy transition through economics

The cost of clean energy technologies has consistently been shown to fall over time, whether that’s the price of generating clean energy or manufacturing battery packs for energy storage and electric vehicles.

This is particularly important in an era where inflation, interest rates and energy prices remain high. And cost overall is used politically to argue that the cost of the transition outweighs its benefits.

Despite clean energy being increasingly a cheaper option than fossil fuels, certain cost barriers are getting in the way, such as curtailment (turning off wind farms because there isn’t enough storage or grid infrastructure to harness cheaper, cleaner power). By 2028, the system operator estimates that managing constraints in the grid could cost the UK around £3 billion each year to manage.

Investing in storage now and removing barriers to new projects will allow us to rapidly scale UK battery capacity in the UK. This could accelerate our use of storage and minimise the need for curtailment, driving down an annual bill of billions paid for by customers - a clear benefit for people wary of the transition.

Similarly, investing in supply chain development could help drive down costs. Offering support to battery pack manufacturers, suppliers or others in a site’s network, would enable the growth of a domestic industry. This could help reduce the price of delivering battery energy storage systems further as well as carbon emissions from shipping imports to the UK .

As I said at the end of my discussion with Marty, I remain highly optimistic. Renewables like wind and solar power are already at and past that tipping point. And technologies like hydrogen aren’t too far off either. The transition is well underway. We just need to keep pushing it along.