Part 2: Is Net Zero the right choice for the UK? First Principles Thinking
- Callum Wheeler
- Jun 26
- 8 min read
Updated: 4 days ago
In Part 1, I looked back at the history of energy in the UK and the decisions that have led us here today. Now, in Part 2, it’s time to evaluate the decisions we must make for a future of both energy security and energy abundance.
In order to do this, we need to strip the problem back to its core, foundational truths.
Let’s dig into first principles thinking.
The North Sea Transition
Learn from your History
In Part 1, we touched on the decline of coal through the late 20th Century, and consequently, the allocation of oil and gas (O&G) tax revenues to the eyewatering welfare bill that ensued. This didn’t quite do justice to an industry that was completely dismantled. In just two years, 1985 & 86, a third of coal mines closed and, by 1994, just 26 remained from 200 in 1980.
230,000 jobs were lost during this period, the majority in coal-concentrated areas. When a pit closed, some towns hit 50% unemployment, devastating communities.
The damage was permanent; a 2024 study found that former coalfield areas have 57 employee jobs for every 100 residents of working age, vs a national average of 73, and 1 in 6 working age adults claim out-of-work support of some form.
Oil and Gas employment
As an industry, O&G is structurally very similar to coal. The industry directly employs 115,000 workers, mostly skilled and high-paid, and are highly concentrated by region. 43% of O&G jobs are in Scotland, with the majority of those in Aberdeenshire - Aberdeen itself is particularly vulnerable.
A 2025 report called Striking the Balance projected the O&G workforce to half within the next decade, with up to 58,000 jobs being lost - a concerningly similar rugpull for regional economies that rely on the sector.
The Offshore Transition
Unlike the coal industry, which closed down into a void, O&G has a successor. Offshore wind is booming - 16GW of installed capacity (1GW = 1 nuclear reactor) across 45 wind farms already supplies a fifth of UK electricity generation, with another 11.4GW in construction and a wider pipeline planned.
The sector employs around 40,000 today and is set to grow to 94,000 by 2030. The industry’s workforce body has stated that 10,000 new workers are required every year in order to meet 2030 targets.
The sector is highly transferable, the UK Offshore Energy review places offshore wind at 90% transferability for O&G employees; listing offshore-working competence, core technical skills, safety culture and marine project management as highly fungible skill-sets.
Where the floor gave way under coal communities with no transition-strategy from Government, O&G is being phased out pragmatically - the North Sea decline is even more inevitable than coal was (and for those questioning this inevitability, head back to Part 1) but this time, it is being managed more effectively.
Initiatives such as the Energy Skills Passport allow employers to identify crossover qualifications and cross-skilling programmes such as wind conversion courses are now running in Aberdeen.
Overall, offshore wind is an ideal industry to replace regionally-concentrated O&G jobs. However, ultimately the energy sector’s purpose is not to create jobs, it’s simply an added benefit (and here a rather critical one).
Only two metrics matter when it comes to energy; abundance and security. Let’s take a first principles approach to both.
A Systems Perspective
Taking a Step Back
When it comes to renewables, analysts often talk about needing to take a systems-view on how renewables integrate into the grid and what is their true cost, which is absolutely correct. The problem is many of these analysts then proceed to entirely fixate on one individual component, without taking a systems perspective at all.
A classic example is calculating how much battery storage would be required to provide back-up power for the entire grid for multiple days. This isn’t the role batteries serve at all and of course returns a completely farcical number.
It is crucial to understand all of the necessary technologies working in tandem as a system and so must be considered as a collective.
Variable Renewables
Offshore Wind
The UK is planning to transition the brunt of our electricity generation from gas to offshore wind. Whilst this might be an ideal solution to replace jobs, is it actually feasible for the technology to replace gas as a baseload generation?
In a rare turn of events for the UK, both the weather and the geology are on our side. Scotland is among the windiest countries on Earth, and the UK’s North Sea basin is the windiest place in Europe, contributing 1/3rd of Europe's total offshore wind potential. As for the geology, our basin is also remarkably shallow; at a depth of <50m across large swathes, it is primed for fixed-bottom offshore wind.
Standing taller than Canary Wharf, with each blade now longer than a football pitch, fixed-bottom turbines are feats of engineering.
To determine offshore wind’s suitability in taking up the mantle from gas, it is essential to examine the demand-profile of the UK’s grid.
The UK has the highest demand for electricity during the Winter, known as a Winter-peaking system. The swing between Summer and Winter is substantial, going from a 30GW peak in the Summer to 50GW in the Winter. This is predominantly due to increased lighting and electric heating, and this delta will continue to widen as more heat pumps come onto the system and heating increasingly electrifies.
This leads into the crucial synergy with wind generation; it’s not just that it feels windier in the colder months, it is - wind speeds are both higher and more consistent in the colder months. This compliments the UKs demand profile and is the ideal technology to scale as this Winter-peaking system amplifies.
Onshore wind & Solar
These technologies are without doubt the cheapest forms of generation on the market.
Clearing at 7.2p/kWh and 6.5p/kWh respectively in the recent Contracts for Difference (CfD) auction round, onshore wind and solar are a no-brainer to build at scale and contribute to creating energy abundance in the UK.
Energy Storage
Battery Energy Storage Systems (BESS) are primarily known as energy arbitrages. Battery operators buy electricity when it is cheap and sell it back to the grid at higher prices, or in the emergency power market; the balancing mechanism. In this way, batteries help smooth out supply and demand day-to-day. This creates a more efficient system by reducing curtailment, contributing to peak-demand requirements and increasing the utilisation rate of transmission lines.
In addition to energy arbitrage, a lesser-known benefit of batteries is their ability to provide highly cost-effective frequency management. As we covered back in the UK Energy System, Part 2, the UK grid must be maintained at a frequency of 50Hz, with little room for error!
Before a staggering 7GW of batteries were deployed in the UK, all built without any type of CfD or subsidy contract, thermal power plants such as gas or coal were used to keep frequency stable. This presented a number of drawbacks:
Power plants contracted to manage frequency could not run at full capacity, leaving margin to ramp up or down as required, reducing the efficiency
Thermal plants were simply not designed for delicate, sub-second ramping of power
Consequently, frequency response services were expensive and cumbersome
Since the newer Dynamic Containment market was launched, specifically for faster-acting units, batteries completely saturated the market and prices collapsed more than 10-fold.
Overall, grid-scale battery storage has saved consumers hundreds of millions of pounds across multiple markets since their inception, and again, were completely merchant-funded without a subsidy in sight.
A net benefit for the grid without a doubt, and so it should come as no surprise that the global-leading battery analytics firm (and one of the UKs finest tech exports of recent times), Modo Energy, are an organisation overrun with Bitcoiners.
Interconnectors
Think transmission lines between Countries - the UK now has 10 in operation, trading electricity on a daily basis with Ireland, France, Belgium, Norway, Denmark and the Netherlands, with another 8 to be live by 2032.
Interconnectors are the often-overlooked backbone of the ‘system perspective’. With 10 nuclear plants worth of capacity (10.3 GW) the UK exports electricity in surplus and imports during scarcity.
North Sea offshore wind powers the continent during windy periods, Norwegian reservoir-hydro delivers during the lulls, French nuclear deliberately schedules maintenance and refueling during warmer months, away from peak demand, and solar & batteries deliver in the Summer. Energy flows from low-priced regions to high-priced regions, all depending on supply & demand - it’s a free-market utopia.
Virtual Power Plants
The sleeping giant. Since the inception of the grid, supply has always chased demand, power stations ramped up and down to meet the needs of the consumer - Virtual Power Plants (VPPs) flip this logic on its head.
This is another concept that we briefly introduced in the UK Energy System, Part 2, where we explored the similarities between a free market, decentralised power system, where small distributed assets such as EVs, home batteries and even smart fridge-freezers are aggregated together to move as a single software controlled power plant, and the self-sovereign decentralised ledger that is the Bitcoin network - a comparison I take every opportunity to point out.
Octopus Energy, using their Kraken platform which now optimises 36 GW of assets across 12 Countries, manage the largest VPP in the UK at ~2 GW.
The majority of this is comprised of EVs; every Octopus customer using the Intelligent Go tariff is participating in one of the largest VPPs in the world. From their perspective, customers simply plug-in their car in the evening, and by morning, the EV has reached the desired charge. But behind this straight-forward exterior, Kraken is trading these EVs as a single asset, targeting the periods of cheapest wholesale electricity.
As software increasingly permeates into our daily lives, and the adoption of EVs, heat pumps and smart appliances continues, demand-side flexibility is projected to increase 5-fold by 2030, and it will meaningfully move the needle on cost-effective grid management.
Dunkelflaute
Dunkelflaute is the beautifully succinct German word describing the dark and windless European Winter lulls, and it is almost impossible to finish an energy podcast without it being mentioned (I should know!).
The challenge here is in a system dominated by solar & wind, what generation will fill the gap, possibly as long as 2 weeks, when electricity demand is at its highest.
Broadly, the answer is that everything we have discussed above will contribute, and to make up the deficit we’ll do what we’ve always done: Burn gas.
It’s not ideal but will always need some gas back-up on the system, and as we will examine in Part 3, we should not be trying to capture that carbon using expensive methods.
Fortunately, RenewaBlox has a far more elegant solution:
Above is a snapshot of 129 anaerobic digestion (AD) sites across the UK that are ideally located to participate in one of RenewaBlox’s most pioneering new business models: The Renewable Peaker Plant, covered in more detail in this blog post back in March.
This is a vision into the future of a fleet of farm & waste-fed renewable peaking plants, delivering electricity to the Country when it most needs it. However, instead of remaining idle the rest of the time as traditional gas peaker plants do, this fleet will contribute to the most secure and decentralised monetary network in the world - Bitcoin.
This model creates a symbiotic relationship that provides a route to zero-cost off peak electricity behind-the-meter for Bitcoin mining, and a flexible offtaker enabling access to lucrative power trading markets for the AD asset owner.
Future Challenges
The grid of the future will be complex and the route there is fraught with engineering and risk management challenges, but it presents an enormous opportunity to create a system of energy abundance, delivering close to zero-marginal cost energy to consumers that engage with flexibility.
It is vital that we approach this future system with a ruthless-pragmatism, a barometer that we apply to all of our decision making at RenewaBlox.
Moving into Part 3, we will undertake a rigorous economic analysis to uncover the Good, the Bad and the Ugly of Net Zero.
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