Future of Energy

Opportunities for businesses in the low-carbon transition

Posted on 18 November 2019
By Audrey Gallacher
Audrey Gallacher
Director of Policy at Energy UK

Audrey has an extensive background in the energy sector, initially working with Ofgem before moving into consumer advocacy. She has held positions with the statutory watchdog, Consumer Futures and the charity Citizens Advice. In her current role as Director of Policy at Energy UK, Audrey is committed to representing an energy supply sector that delivers great service and value, and most importantly treats its customers fairly.

Low-carbon power is now the dominant form of energy supply in the UK. In 2018, it accounted for a record 54% of our total generation.

The low-carbon and renewable energy economy is also growing, and was worth £44.5 billion in 2017.

The transition to a low-carbon energy future offers significant opportunities for businesses that make strategic early decisions to adapt to the new landscape.

With the UK now working to a net zero emissions goal by 2050, we all need to play a role – from domestic customers to SMEs and up to the largest commercial customers – if we are to meet this ambitious and critical target.

We also need to continue to decarbonise the transport and heating sectors.

The low-carbon energy future is already here

As I’ve mentioned, low-carbon power is already the dominant source of electricity generation, and that is only going to increase.

For example, offshore wind generation is forecast to reach up to 30GW by 2030, up from around 8GW today. 

There are now nearly 1 million generators in the UK, which is an increase from around 1,000 in the year 2000, and more renewable generators than ever before.

If you wanted a signal of how far we’ve come – and what the future holds as a result of the power sector’s actions – then look no further than the record-breaking period at the end of May, with 18-days of no coal generation in the UK.

It won’t be long before we have our first month with no coal generation.

Widespread business benefits

As with any emerging sector, there is ample scope for every business to benefit.

The opportunities are widespread in many areas such as:

  • New renewable/low-carbon power assets (both community and grid-scale)
  • Delivering grid flexibility through storage, aggregation and Demand Side Response (DSR)
  • Utilising Smart metering and data to take advantage of smart appliances, energy management systems and time-of-use tariffs
  • Assisting businesses in the transition to a low-carbon economy through consultancy services
  • Energy efficiency – a recent survey we conducted with PwC found that an increasing number of businesses are seeing not only the cost-saving benefits of more efficient energy use, but the benefits it can bring to a business’ brand as well as contributing to overall sustainability goals

The right time to put the wheels in motion

In terms of timing, there is no such thing as too soon in this area. It is arguably the greatest global challenge that we have ever faced.

Yet despite positive recent progress in the UK, momentum is stalling and statistics show that from a global perspective, we are struggling to meet the targets set in the Paris Agreement.

That’s not to say it is too late either.

The recent move to increase the UK’s ambition by elevating our 2050 emissions reduction target from 80% to 100% displays recognition that we can decarbonise at a faster rate than previously thought.

The UK is the global example – and world leader – in how to decarbonise the power supply of a developed economy.

Many countries are looking to us for guidance, which presents an opportunity for UK businesses to export skills, products and expertise abroad and access new markets.

Policy needs to keep pace

Clear government decision making, policies and legislation are essential if the UK is to meet the challenges of net-zero and our transition to a low-carbon economy.

If the right decisions are made, the UK could become a world leader in future green technology such as Carbon Capture Usage and Storage (CCUS).

To understand how legislation has influenced the energy market, you need look no further than the passing of the Climate Change Act in 2008.

This brought forward significant renewable power capacity. And with the new even more ambitious net-zero target, it is likely that we will see even more policy support for low-carbon power in future.

We have seen the recent commitment of a ban on internal combustion engines (ICE) from 2040, with calls for this to be brought forward to 2032. In either case, this ban delivers a significant boost to the sales of electric vehicles (EVs).

However, some elements of the planning system – for example, the Planning Act 2008 and associated National Planning Policy Framework (NPPF) – are still not fit for purpose under a low-carbon energy future.

One such example is around the treatment of battery storage projects, where the 50MW threshold for projects within the Nationally Significant Infrastructure Projects (NSIP) regime is disproportionately low. This has disincentivised many larger-scale battery storage projects coming on to the system.

A significant number of projects have been, or are being, developed with a 49MW capacity; it is no coincidence that this is just below the NSIP’s threshold.

Best practice leading the way

Despite the challenges, we are already seeing best practice and innovation emerge in many areas of business.

For example, in the retail energy market, suppliers are offering renewable tariffs, time-of-use tariffs, EV specific tariffs and generally overhauling the customer experience, taking advantage of new technological advancements.

We are seeing large companies transition from their previously carbon-reliant business models to focus purely on renewable power.

In the technology sector, many innovative firms are taking advantage of big data to provide flexibility services to the grid, as well as home energy management solutions to consumers.

The common trend across all these organisations is an appreciation of the opportunities that the low-carbon energy transition presents – and a readiness to adapt business models to take advantage of these opportunities.

This approach will ensure that these businesses are not left stranded in what will be the biggest overhaul of our economy since the industrial revolution.

To hear more from Audrey listen to our podcast series, The Future of Business Energy, where we discuss Women in Energy.

You can also contact our Energy HQ experts for advice and support for your business -  call us on 0800 193 6866 or send an email to nBS@npower.com (or if you’re an existing customer, contact your dedicated Client Lead).

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