Michael Phelan, Chief Executive and Co-founder at GridBeyond, shares his views on the Uk’s Green Economic Recovery Plans & National Grid Forecasts.
The Government recently announced its focus on fighting unemployment and post-COVID-19 economic recession by heavy investment in new environmentally friendly residential projects and modernisation of the old housing system.
The goal is to provide green jobs and affordable housing, whilst simultaneously advancing decarbonisation.
Whilst it is encouraging to see the Government take action on its commitment to carbon neutrality by 2050, in reality, these goals will not be achieved without empowering and further incentivising industrial and commercial businesses (I&C) to retrofit their operations with new technologies and become more flexible with their energy consumption.
The EU stimulus package, which was agreed last month, sees green investments as a way to support economic recovery and reverse the financial impact of the pandemic.
With 500 billion Euros designed to back green projects and decarbonisation technologies (almost a third of the total recovery budget), the EU seeks to stimulate economic growth whilst delivering on climate commitments.
Despite being the first country in the world to make the 2050 net-zero emission target legally binding, the UK is so far falling short on its promises. The ‘build, build, build’ strategy alone is unlikely to improve the situation.
The UK’s plans currently focus on investments in the residential sector – building new houses and improving the energy efficiency of those existing. This leaves little focus on retrofitting the industrial sector to ensure it meets the needs of a net-zero economy.
In contrary, the EU’s investment in zero-carbon buildings and industrial processes has been driven by the understanding that widespread uptake of flexibility and energy efficiency solutions by large businesses will lower their costs and support job creation, to fight against post-pandemic recession.
“With a strong European manufacturing base, Europe can show worldwide industrial leadership. (…) Our joint industries and associations are committed to making a green economic recovery a collective success”, wrote the representatives of electricity, heating, cooling, building and transport sectors in their letter to EU leaders in April this year.
Energy retrofitting in the context of the energy intensive I&C sector means making production plants and operational processes more efficient, resilient, and controllable.
New energy technologies, such as intelligent energy platforms, enable flexible energy consumption which helps to integrate more renewables onto the grid, and real-time energy performance monitoring of each connected asset. AI and machine learning algorithms find patterns of consumption to automatically ascertain production and processing schedules for optimal costs and greater efficiency.
In-depth analytics benchmark the current performance against historical data and industry operational standards, enabling early fault recognition and supporting predictive maintenance processes to prolong assets’ life cycle and reduce risk of operational downtime.
The most powerful technological solutions, such as ‘hybrid battery and demand network’, help to unlock energy flexibility of seemingly inflexible assets, retrofitting even older machinery and making it more resilient to any new decarbonisation standards the industry should expect as part of the net-zero strategy.
The Government’s current green recovery strategy lacks not only focus on modernisation of the existing industrial sites, but it has also missed an opportunity to include advanced energy technologies as integral elements of the new building specifications, especially when it comes to high energy consumption sectors.
With estimates showing non-residential buildings being on average 40% more energy intensive than residential, the fight against climate change will not be won without the involvement of I&C business and their willingness to embrace innovation and new technologies.
Property investors should see the pandemic as an opportunity to advance climate resilience standards for buildings, both to support the low-carbon economy and deliver financial and operational benefits through active participation in the energy markets.
Ultimately, large energy users across multiple sectors, such as metals, chemicals, refrigeration and data centres, that choose to take advantage of demand side response (DSR) programmes, help grid operators to achieve decarbonisation targets whilst benefiting from substantial revenues and savings. These opportunities should not be overlooked, especially in light of recent energy market forecasts from the grid operator.
National Grid’s annual report, Future Energy Scenarios, projects that as the value of energy flexibility grows in line with the increasing integration of renewables. The volume of ‘pure’ demand side response derived from load rather than on-site batteries or generation, is likely to double within the next two to three years from the current level of 1GW to 2GW.
Consequently, we anticipate that the growing demand for DSR services is likely to boost the monetary value of its provision. This would inherently provide large energy users with a greater opportunity to access new sources of revenue. When this is offered without any impact on their operational capabilities and capital expenditure budget, the business case is increasingly financially viable, particularly in the current economic situation.
The need for greater energy flexibility on the grid is becoming a more prominent topic of discussion, not only for energy experts, but also amongst decision makers in various political spheres. In response to the Government’s recovery plans, the Net-Zero All Party Parliamentary Group; a coalition of MPs with an interest in shaping and accelerating energy policy, called for the ministers to enhance demand response incentives for I&C consumers to encourage greater participation in balancing services.
Due to the combination of increased demand flexibility requirements from National Grid and the growing social and political pressure to deliver against net-zero targets, now is an ideal time for I&C consumers to explore opportunities in the energy markets and intelligent energy technologies. Advanced AI-powered platforms enable access to new revenue streams through participation in balancing services, in addition to increased efficiencies, savings and overall business sustainability.
The Government’s current economic recovery strategy focuses on creating new green jobs through investments in the residential sector, however, large businesses need to step in and play their critical part in day-to-day decarbonisation and advancement on the country’s climate change commitments.