The future of energy: How 8 disruptive changes may affect your business
Recently, Haven Power commissioned energy experts Cornwall Insight to assess how the UK energy system’s transformation from a supply to service-driven model will affect businesses. In the first of four ‘future of energy’ articles, we look at eight disruptive changes that your organisation may start to experience - mostly to your advantage.
The supply of business electricity in the UK used to be simple. Huge ‘factories’ remotely generated vast quantities of baseload power at a set price, which changed occasionally. Your company needed a certain amount of power and an energy provider supplied it.
However, the energy system is changing fast. Technological advances, rising customer expectations and volatile costs make that traditional, centralised electricity market structure increasingly incompatible with the needs of the 21st century.
So what’s this transformation towards a more service-driven model likely to mean for your business?
1. More new suppliers offering an increased number of services
There are almost 60 suppliers of electricity in the industrial and commercial (I&C) electricity market, offering a wide range of supply contracts and ‘valued add’ products such as Energy Services.
As a result, businesses aren’t always selecting the power supplier offering the lowest costs. Increasingly, they’re looking for energy partners that are competitive on price and that offer additional services or opportunities.
And this means you have a bigger choice, and more opportunities, than ever before.
2. New technologies leading to more change
For businesses, the first of these changes will release the potential for more revenue and greater resilience. The second - a smart and decentralised grid - will also provide potential for additional income by establishing local and/or regional energy markets.
So, having the flexibility to adapt to change will give your business a distinct advantage.
3. More smart meters enabling better demand management
Installing a smart meter is one of the first steps your business can take towards playing a part in the UK smart grid of the future.
By enabling half-hourly settlement for all customers and providing the associated data for analysis, smart meters could revolutionise how your business understands its usage and manages its demand. This could help you save on your energy costs, and have the potential for reducing your carbon dioxide emissions and boosting your sustainability credentials.
4. More decentralisation, more connectivity, more money
Between 2011 and 2017, embedded or distributed generation – connected directly to the distribution network, rather than the national transmission network – grew from 12GW to more than 40GW.
This move towards decentralisation and an increased number of local and regional connections is set to continue. Which means that if you’re generating your own electricity, there’ll be even more opportunities to sell your power and add to your income.
5. More decarbonisation; more intermittent generation
The Government’s drive to decarbonise energy has led to generators - including Haven Power’s parent company, Drax Group - moving away from coal.
Many generation units have chosen to play their part in the decarbonisation drive by relying more upon solar photovoltaic (PV) or wind turbines for their power. While this is good news in terms of reducing CO₂ emissions, it also indicates a greater reliance upon intermittent, weather-dependent sources.
The smart grid will balance out this dependence on the sun and wind with additional power sources. These will include a range of generators (from small, local units to national operators like Drax) that can turn the power on or off quickly and cost-effectively.
For your business, this creates opportunities as a self-generator on two fronts: either as a small-scale solar PV or wind operation, or as a supplier of a non-intermittent kind of power.
6. More uncertainty about future demand
The UK’s future heating and transport requirements are set to increase the demand for electricity generation; however, the extent of that increase is hard to predict.
While this creates uncertainty, it also generates a potential opportunity - to sell your self-generated power to the smart grid and help meet the rise in demand.
7. Fewer new subsidies for low-carbon plant
The Government is suggesting there’ll be little new subsidy available for low-carbon generation before 2025.
This increases the uncertainty about how generators will be able to renew their ageing plant and help the UK meet its decarbonisation commitments. On the other hand, if you’re already receiving subsidies and/or your generation units are relatively new, your organisation may already be in a strong position.
8. A fairer system of charges
Currently, the highly centralised model of generation and transmission forms the basis of how suppliers charge for business electricity. However, as the industry transitions to the new service-based model, the way it charges customers is open to review.
This could create an opportunity for you to negotiate better deals with your existing supplier (or a new provider), and/or to reap the benefits of being a self-generator.
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