Breaking the Jevons Paradox

The Role of Renewable Energy in a Sustainable Future

To my mind the Jevons Paradox sounds like the title of an Arthur C. Clarke novel, but while it doesn’t concern science fiction, in the context of renewable energy it does contemplate the risk of a dystopian future. The eponymous paradox was first articulated by the economist William Stanley Jevons in “The Coal Question” (1865), and states that as technological advances improve energy efficiency, so total energy consumption counterintuitively tends to rise rather than fall. Jevons observed that as steam engines became more efficient, so coal consumption increased, as cheaper energy led to greater industrial activity.

This conundrum presents an important question: as we scale up renewable energy, are we merely feeding an ever-growing demand for electricity rather than reducing overall energy use? Is renewable energy just the new coal? And if so, what can be done to avoid this trap?

A scathing yet poignant observation of humanity's self-immolation in the crucible of consumerist excess. A must-read. Paul Broxup - Samara Investments

Jevons Above: The Global and UK Energy Landscape

Electricity demand is rising globally due to trends like the electrification of transport and heating, AI and cloud computing, industrial automation. While increased renewable capacity is essential for decarbonisation[1], if total energy demand continues to outstrip supply, we risk not reducing carbon emissions at all.

In the UK, headline electricity consumption has fallen in recent years, thanks in part to efficiency gains and deindustrialisation. However, there are two key reasons why this may be misleading:

• The Growth of Decentralised Generation: Small-scale solar PV, both domestic and industrial, now contributes an estimated 10 TWh annually, meaning some electricity demand is masked from traditional grid statistics.

• Outsourcing of Industrial Energy Demand: The UK’s shift away from energy-intensive industries has reduced local consumption, but in reality this is just displacement as any reduction has been more than replaced by industrial economies. Global energy demand continues to rise, driven by developing economies.

Chart 1: UK electricity consumption (TWh)[2]

On the surface the UK appears to be consuming less power, but demand for electricity is growing, both at home and globally. If we fail to plan accordingly, the Jevons Paradox may manifest itself in ways we struggle to control.

Chart 2: Global Electricity Consumption (TWh) – UK overlaid[3]

 Breaking the Cycle: How to Avoid the Jevons Paradox in Renewable Energy

If increasing energy efficiency and supply risks fuelling greater demand, how can we ensure that renewable energy leads to true decarbonisation?

1. Expanding Energy Storage Solutions (BESS) to Prevent Waste

While long-term modelling for solar and wind is relatively predictable, in the short-term generation can be intermittent, meaning that without adequate storage, excess energy can be wasted. Grid-scale BESS must be expanded to store surplus renewable energy and deploy it during peak demand, reducing the need for fossil fuel backup generation.

2. Embracing Decentralisation for Energy Autonomy

Currently, the UK’s energy market is dominated by large-scale, centralised generation. This creates inefficiencies and limits the ability of small producers (such as SMEs with solar plus BESS) to participate fully.

Enabling SMEs to generate, store, and trade electricity more freely supports:

• Reduced grid congestion and inefficiencies.

• Enhanced energy resilience by localising production and consumption.

• More energy-conscious behaviour among businesses.

3. Adopting a More Open Market Approach

Unlike a dynamic electricity markets such as ERCOT in Texas, the UK’s intermediated system makes it difficult for smaller producers to sell excess energy back to the grid directly. Allowing smaller producers to act as market participants would:

• Increase competition, reducing reliance on dominant suppliers.

• Incentivise storage adoption, leading to better demand balancing.

• Enable businesses to monetise renewables, encouraging more widespread adoption.

4. Encouraging Energy Circularity

I recently consulted on a microgrid project in an industrial park where businesses are seeking to share surplus solar power through a common BESS. This type of model, if scaled, could play a crucial role in preventing wasteful overproduction while maximising efficiency. Energy should not be wasted simply because one business has excess while another has a shortfall. Implementing microgrid solutions has the power to optimise energy usage without unnecessary demand expansion.

Knock Knock Knocking on Jevons Door: A Smarter Renewable Energy Future

The Jevons Paradox presents a real risk: if cheap renewable energy simply leads to greater energy consumption, we may fail to meet net-zero goals despite scaling up renewables. However, by focusing on storage, decentralisation, open markets, and energy circularity, we can ensure that increasing renewable capacity leads to genuine carbon reductions rather than runaway demand growth.

Through Samara, I have seen firsthand how SMEs can play a vital role in this transformation. By investing in solar PV and BESS, and by pushing for policies that support greater market participation, we can ensure that the renewable energy transition results in a cleaner, more reliable, and more sustainable future, not just more electricity consumption.

If we are serious about avoiding a dystopian future of relentless consumption, then the challenge that lies ahead is not just about producing more energy but consuming it more wisely. And that is surely a challenge worth embracing.

[1] If indeed decarbonisation remains a goal – see my last piece “Net Zero to Ground Zero”

[2] Source: https://www.gov.uk/government/collections/electricity-statistics Refers to losses on the public distribution system (grid system and local networks) and other differences between data collected on sales and data collected on availability. * Includes some iron and steel consumption. *** Public administration, transport, agricultural and commercial sectors.

[3] Source: https://www.iea.org/reports/electricity-information-overview/electricity-consumption?