Ofgem’s Smart Systems Plan is the latest salvo in a number of reports, which all highlight coming changes to UK energy, and attempt to set in place measures to bring us towards a more sustainable energy system.

But what essential changes are earmarked by Ofgem, and how might your businesses be affected?

1. New technologies are coming

Consensus is here, new tech will play a key role in tomorrow’s UK energy. That means understanding what such tech is, what it actually does, whether you can get involved with it, and what the opportunities are is key.

Energy storage is one top tech businesses could get to grips with. Ofgem promises it will play a vital part in the future.

But there are others. Renewable technologies across the board are big news. So are demand response innovations. These will provide and manage more and more UK power, and corporates should look at their portfolios and consider what scope is there for improvement and integration.

2. The flexible UK grid

All this technology is needed for one reason; we are switching to more flexible grid systems. In them, energy can be stored, renewables can provide a greater and greater supply; the simple, fossil based, always-on network is on the way out.

In future, demand and supply will be more intelligently managed. There will be more and more chances for UK firms to alter how and when they use, or supply energy, both to make money and to help the UK grid become better balanced, more resilient and more sustainable.

Smart metering, adaptive energy behaviours; all offer opportunity, but all must be learned and, if necessary, invested in.

3. Energy markets

It makes sense that with all these new technologies, and with a new type of grid system, the market mechanisms that relate to UK energy too must evolve.

So how companies access such markets, and how the overall costs of energy are determined, metered and paid for is changing. This is an essential area for businesses to understand as controlling energy costs is vital.

4. Regulation

Again, it makes sense that with such a shifting playing field, energy regulation must change. This might affect licensing and planning for renewables for example, or how connections are controlled and how charging is applied for energy storage.

Ofgem is looking at how to embed the most useful, fairest systems. Every business has to be aware of where the potential lies and the pitfalls to avoid.

5. Cash in hand

Finally, Ofgem notes that a study for the Government estimates the benefits of this new, smarter energy system to be up to £40 billion to 2050.

That’s a huge sum, and reveals why so much work is going into redeveloping our grid for the future. Every business deserves a chunk of that cash; so getting up to speed with the changes is urgent.

How will the Ofgem Smart Systems Plan affect your business? The Energys Group team would love to hear from you and have a conversation.

 

Balfour Beatty is one of the UK’s top infrastructure providers. As such, it is expertly positioned to comment and lobby on measures required to maintain jobs, competitive industry and a burgeoning UK economy.

The firm’s latest report; ‘Infrastructure 2050 – Future Infrastructure Need,’ has much to say. Overarchingly, it seeks to influence future infrastructure and energy policy, highlighting UK skills shortages, an investment shortfall and economic uncertainty, plus Brexit, as just some of the obstacles to future prosperity.

The report in detail; energy

Balfour Beatty clearly believes that technology is key to the future. Its paper argues that smart technology in building design can help individuals control the space around them and the amount of energy they use.

This endorsement of energy efficiency is most welcome, but there is more. The firm says that a clear long-term vision for UK energy policy needs to be developed, agreed, communicated and retained to provide investors with certainty.

More specifically, the government should support the development of interconnectors, smart grids and smart networks and energy storage through the removal of regulatory barriers to develop markets, in order to help deliver £8bn a year savings to the UK consumer.

Evidently, Balfour considers the UK grid antiquated, and wants solutions fast. It says society will come more and more to demand intelligent infrastructure, which makes the most of energy generation and
distribution.

This will make our buildings smarter and offer up data to inform future decision making. But the implicit sense in the paper is that as a whole, the UK is as yet distant from reaching such goals.

Decarbonisation

Unsurprisingly, Balfour seeks a largely decarbonised energy system before the middle of the century, saying a continuous, reliable and low carbon energy supply is crucial for economic growth and stability as well as social well-being.

It predicts a worsening energy crunch by 2030 and is candid on today’s incoherent strategy, saying, ‘A clear long-term vision for UK energy policy needs to be developed and communicated to facilitate the hundreds of billions of pounds worth of investment in the energy supply infrastructure required by 2030.’

Balfour does praise recent decisions on an overall coal phase out, but argues such certainty is required across the energy policy and investment landscape.

The firm sees a burgeoning future for energy storage, saying it can be used to complement low carbon and renewable generation sources if utilised as a balancing mechanism and appropriately regulated, creating a multi-billion pound industry.

The sense within the paper as a whole is that there is hope out there, but appropriate actions are required fast, and today’s politics pose a risk to future readiness in energy.

The Energys response

“We welcome Balfour Beatty’s paper,” comments Kevin Cox, Managing Director, Energys Group. “The energy sections in particular show how world leading infrastructure providers are all coming to the same conclusion; energy efficiency and decarbonisation represent the future.

“Obviously, tough political times are here, and there are myriad challenges for today’s UK energy sector. To my mind, the paper points to one truth.

“If low carbon firms, centralised policy and the big infrastructure providers and operators come together, there is a chance not only to develop a prosperous UK, but one whose jobs and industries primarily create wealth from low carbon, not coal.

“The issue is we must start now. And all must pull together. Time is not available to waste.”

000The Energy Institute (TEI) has produced its 2017 Barometer; analysing the pressure on UK energy efficiency. What’s TEI’s professional verdict on the next 12 months for low carbon?

What are 2017’s key challenges?

Energy policy, the investment environment and the need for energy system change are the main challenges for the energy industry in 2017, as identified by TEI members.

Uncertainties

Brexit and wider geopolitics could negatively impact efforts to develop a clear UK energy strategy, to update infrastructure, and to meet demand and climate targets at least cost to end users.

Brexit itself

Brexit is a vast concern to the sector. Negotiators must pay heed to energy policy, regulation and trade agreements, energy costs, and security of supply.

Free movement of labour is key, and skilled engineers and workers could be at a premium. Training and apprenticeships could help prevent a shortfall.

Great Repeal regulations should be informed by existing EU legislation, and continued cooperation with the EU is considered desirable.

UK energy policy

Uncertain energy policy is contributing to a risky investment climate, with immature low carbon technologies most affected. Tech readiness and markets are being harmed. Better business and academia links are needed.

Moderate price rises across primary and retail energy markets are coming in 2017, with exchange rates expected to have a greater influence than in previous years.

Transition to low carbon

The UK will likely fall short of its carbon targets through to 2050. Additional support for energy efficiency and renewables could help close the perceived carbon policy gap. That said, wider environmental concerns, falling technology costs, and rising energy costs are making efficiency more attractive.

Future energy will be more flexible and will involve system-level strategies and new business models. Grid updates, energy storage and new tech will change behaviours and shift consumer demand.

Financial incentives, mandatory standards and community engagement are seen as the best measures for reducing emissions.

Overall, decentralisation and new models will drive innovation, with new tech coming to suit the new direction.

And finally

TEI professionals expect that decarbonisation of the energy system will be the greatest change they witness over their careers. But it won’t come without its challenges, and its winners and losers.

Call us today for an informal chat about the ways Energys Group can help your business improve its low carbon.