Speaker Interview:

John Armstrong, Head of City Energy Operations, E.ON UK

“We are on the cusp of a pivotal moment in ‘heat’ where we move away from our outdated gas boilers and into ‘uncharted waters’ – making it a truly exciting place to be!”

In advance of March’s Future of Utilities Summit, I interviewed John Armstrong – E.ON’s Head of City Energy Operations to learn about his current projects, understand the challenges we face in meeting the net-zero commitments, and his thoughts on the steps we need to take to overcome them. Here’s what he had to say…

(SF) You are the Head of City Energy Operations at E.ON UK, what are you most excited about working on at the moment?

(JA) The decarbonisation of heat presents everyone in the industry with a once-in-a-generation challenge. Up to now, the decarbonisation of the energy system has been achieved through ‘centralised’ solutions such as offshore wind and other renewables in the power sector – an achievement by a relatively small number of actors making some big decisions at a high level.

Heat just doesn’t have a single easy-to-implement answer and at a national scale pretty much involves millions of people making individual decisions to change – that’s because about half of all energy consumed is used for heating and most of that is currently delivered through hydrocarbons in some form.

We are on the cusp of a pivotal moment in ‘heat’ where we move away from our outdated gas boilers and into ‘uncharted waters’ – making it a truly exciting place to be!

Here at E.ON, we are working with cities and communities to lead on the decarbonisation of heat at scale: installing heat networks and seeking opportunities for future ‘sharing’ networks where we take what would otherwise be wasted heat and recycle it through the system, using it again and again.

That could be heat from industrial processes, from underground railways or even, as I’ve written before, from slightly more unsavoury sources such as sewers.

(SF) In order to meet the government’s net-zero commitments, the UK’s heating must be decarbonised. In your opinion, what are the most significant challenges that need to be overcome in the next 18 months?

(JA) Substantial progress is being made in the area of heat, and in particular in the new-build housing market. The ban on gas boilers from 2025 is a clear example of this. However, existing housing stock needs addressing if we are to meet any kind of net-zero target – there are more than 14 million houses in the UK with an EPC energy efficiency rating of ‘D’ or worse. That basically means they are using twice as much energy as an ‘A’ rated building.

To achieve our carbon aspirations we need to shift all of those properties up the efficiency scale. To put that in perspective, to have all of those properties where we need them to be we need to increase the rate of energy efficiency installations from the current 9,000 to 21,000 per week from 2020.

But that’s not all, there are any number of policy measures that can help stimulate a future energy system:

  • Increase the current ECO budget of £640m to £2bn – predominantly by re-prioritising Government expenditure – to address the decline in the installation rates of energy efficiency in recent years
  • Encourage the adoption of sustainable energy solutions such as heat pumps and solar and storage
  • Winter fuel payments should be targeted on those most in need of help, which we believe could free up around £1bn
  • Provide access to low-cost green finance to deliver net zero in an affordable way
  • Introduce stamp duty reductions or other incentives to homeowners who install solid wall insulation
  • Incentivise businesses that own their own buildings to invest in energy efficiency via the creation of business rates relief

For our cities, energy efficiency presents a huge challenge. Increased electrification of heat (along with an explosion of demand for electric vehicles) will exponentially increase demand on the electricity system. This pushes up costs overall – especially as we need a system capable of delivering on the ‘coldest’ day – resulting in a substantial amount of waste as investment in capacity risks being barely used.

Heat networks present a fantastic opportunity to reduce that peak demand and enable the sharing of energy. If we can build energy-efficient buildings and then capture ‘waste’ heat from systems such as air conditioning, IT and even the Underground then urban centres have the potential to become super low carbon whilst at the same time not resulting in high costs.

We all share the challenge now to create a system which is not just low carbon but also provides the energy that society needs at a reasonable cost.

(SF) How important is collaboration in the industry moving forward?

(JA) Collaboration is hugely important in the future energy world. Our system was developed for ‘top-down’ transmission of energy and simply isn’t designed to enhance collaboration. If we truly want to grab every opportunity to reduce carbon (and cost!) we need to find ways to improve the system to enable collaboration.

Heat provides a huge number of opportunities to collaborate – especially with the development of low-temperature networks and heat pumps. We need energy companies, industry and commercial building owners/developers to work together to seek opportunities and to push boundaries. Some fantastic case studies exist of capturing heat from sewage works, data centres and underground tunnels. These are all fantastic examples of where companies have collaborated to deliver solutions that not only deliver lower carbon but also lower costs.

With any collaboration, we must learn to give up a little control. It is just too easy to install a gas boiler and feel in control… to move on from this we have to be prepared to give up a little to gain a lot.

(SF) Can technology help?

 (JA) Technology is the game-changer in energy. Technology helps us make not just a step change but to make a huge leap forward – something truly transformational. The future energy system will hugely decentralised and hugely complex. It is only through technology that we will be able to navigate through this complexity and make it simple and controllable for the end-user – in business or at home.

E.ON has a really exciting technology we call ‘ectogrid’ which uses technology to enable a ‘sharing’ energy system. By connecting buildings with different needs and balancing the energy between them, ectogrid™ effectively uses all available energy flows and makes it possible to decrease both pollution and the energy consumption in a city.

 It’s only through technology that we are going to make the leap we simply must make.

(SF) Which projects are you most excited to hear the outcomes of?

 (JA) The LotNet program being run by Warwick, Loughborough, Southbank and Ulster universities is really exciting. The group is leading on fifth-generation heat networks, looking for ways to decarbonise heat and deliver really innovative and game-changing energy systems in the future.

I am also really interested to see the outcomes of all the work around hydrogen. Although hydrogen feels a little way off to me I do see it playing a part in the system in the future, particularly in transport.

(SF) What are you looking forward to most at Future of Utilities Summit 2020?

(JA) The Future of Utilities Summit provides a forum to meet industry colleagues and to share ideas. I am looking forward to being able to see the fantastic work across the industry and to take away opportunities to collaborate.

Seb Fox

Sector Manager – Utilities

Seb Fox is the sector manager for our Future of Utilities portfolio. He keeps an eye on industry developments, hot topics, and puts together our conference agendas. He’s been with the company since 2017, having graduated from Mansfield College, University of Oxford.

Follow him on Twitter here: @Futureofutils