3 reflections and predictions for maximising your energy strategy in 2021
Our future energy system will be fully decarbonised, digitalised, decentralised and distributed. But what changes happened in 2020, and what developments can we expect in the next twelve months?
If 2020 taught organisations anything, it’s that no one can be completely certain of what the future holds. Your energy strategy is no exception. Nonetheless, it’s important that organisations anticipate and prepare for the changes that might lie ahead, particularly as decarbonisation expectations continue to grow.
The impact of COVID-19 put the brakes on business and day-to-day life as we know it. But it also opened our eyes to the potential of a lower carbon future and made many organisations reassess the speed to which we want to reach a greener future. Therefore, it was so exciting to see many of the businesses and public sector organisations we work with take huge leaps towards being more sustainable. Across on-site generation, energy digitalisation, optimisation and electric vehicles; organisations set their ambitions skyward.
As we move into 2021, action against climate change is set to be a firm focus the world over. The US is expected to seek to re-join the Paris Agreement on the first day of the new presidential administration. In the face of the ongoing pandemic, organisations will be looking to Build Back Better and accelerate their transition to a sustainable future, underpinned with the support of governmental green recovery programmes. And the year will close with the 26th UN Climate Change Conference of the Parties (COP26), viewed by many as the most significant climate event since the 2015 Paris Agreement.
In this blog, we reflect on some of the partnerships we have undertaken with our customers in 2020 and the key energy strategy trends we can expect to see in 2021.
Reflections on 2020
As we reflect on 2020, three key areas stand out as driving significant change in enhancing the energy strategies of organisations around the world, and accelerating our progress towards a greener future.
Electrification of transport
Even with the effects of COVID-19 impacting business and wider society, 2020 was the year that electric vehicles truly shifted a gear towards mass adoption. In the UK, the government mandated that sales of vehicles with internal combustion engines (ICEs) must end by 2030. This was joined by business, consumer, environmental groups and NGOs ramping up pressure on the EU to move to similar timelines, with the potential on delivering fleet vehicle transition even sooner. While in the US, States have provided the way forward with, for example, California committing to its own target of 2035 for an end to petrol-fuelled car sales.
These regulatory changes not only impact the types of vehicles that organisations procure - the transition to electric vehicles can be made faster, simpler and more cost effective with an integrated strategy that addresses the operational implications:
Auto-manufacturers (or OEMs) continue to bring more vehicles to market, supporting greater availability and choice for businesses and consumers alike. Yet, the transition to EV does new present challenges for these organisations as the integration with energy generation, consumption and optimisation becomes more a requirement. Partnering with an energy provider like Centrica is one way that OEMs are tackling this challenge. In 2020, our existing EV ecosystem of partners (Optimise Prime, Ford and Citygate VW Dealerships) was enhanced with OEMs such as Vauxhall, Volkswagen. We also formed an innovative partnership with Lotus that looks to tackle three aspects important to EV success - vehicle ownership models, decarbonisation of vehicle manufacturing and end-customer support; as well as supported the local governments ambitions to decarbonisation of public transport by rolling out Stagecoach’s EV bus charging station in Manchester.
This expanding list of organisations brings together the best vehicles, infrastructure and software to build on the 17k chargers we have installed in the last ten years as we aim to make sustainable transport a reality.
Digitalisation and optimisation of energy
An increasing focus on sustainability and the rollout of more renewables on the grid continues to challenge networks operators globally on the need to keep the grid in balance. Ensuring access to a stable electricity grid and energy source is fundamental to a business’ operation and will be key to the further incorporation of sustainable generation. One answer to this challenge is the increased utilisation by businesses and public sector organisations of digitalised energy optimisation; as demonstrated by our joint venture with the European Commission; Cornwall Local Energy Market project. This was the UK’s largest trial of energy flexibility, which saw over 200 homes and businesses trading stored renewable electricity.
Across Europe innovative optimisation projects utilising battery storage technology, machine learning and AI created important test cases for the potential of Virtual Power Plants (VPPs) to provide energy security without the need for large fossil-fuel generation. In Belgium Elia, the national grid operator in Belgium, and expanded their involvement with a key project at Terhills, while EStor-Lux in Belgium and iwell in the Netherlands developed their own projects to aggregate optimisation potential in supporting the grid and Eel Power in the UK implemented multi-market-access 10MW battery optimisation project.
On the flipside of business, to create a truly optimised grid means in the incorporation of automated residential energy flexibility. Which is why it was encouraging for us to have the opportunity to work in conjunction with sonnen to test the potential of wide-spread residential optimisation with a partnership that deployed a digital network of more than 100 home batteries, optimised by our in-house FlexPond optimisation platform.
Generation and alternative energy
For businesses and public sector organisations the fastest route to creating energy independence, flexibility and reducing carbon remains on-site generation. Solutions such as Solar PV and Heat Pumps are coming into their own as reliable and cost-effective products to implement.
Many organisations are taking a more detailed look at sustainable energy generation for their site, or involvement in joint schemes that pool resources. Shelter Creek Condominiums in North America now offset electricity usage by over 70% through solar, Arrow Linen who worked to create a solar system that are saving them £3m per year and Tarkett in Italy who have combined Solar and CHP to reduce their annual CO₂ emissions by 830 tonnes.
But for a lot of organisations on-site generation in the quantities required may not be possible due to space or site access. Which is why more innovative solutions such as Energy-As-A-Service will be required. By capturing a range of energy solution options within a single-fee (i.e. generation, optimisation and grid supply) organisations such NEC Birmingham are able to create a bespoke package of options that best suit their requirements and circumstances. This joins our stable of future focussed energy solutions such as our development and investment in a fuel cell project in South Windsor, USA.
Through an Energy as a Service approach, the NEC will reduce energy costs and improve energy resilience, while being less reliant on grid power.
Predictions for 2021
There are several key trends likely to be the focus of successful energy strategies in the year ahead. Focusing on these opportunities will help organisations to become more efficient, resilient and sustainable in 2021 and beyond.
Improving energy management and on-site generation
2021 will see organisations continue to work towards their net zero goals, while keeping costs under close control.
On-site generation and storage solutions are delivering supply, price and carbon certainty for organisations’ electricity and heat usage. Solar generation is the greener choice and can also reduce energy spend by up to 30% compared with grid sourced power, while commercial heat pumps are becoming more cost-effective and when paired with Solar are carbon neutral. What’s more, by combining solar with battery storage, particularly as battery technology prices continue to fall, businesses can utilise stored energy overnight or during peak price periods to displace their remaining grid supply or charge their vehicles.
Looking ahead, we can expect to see organisations increasingly look at how different energy technologies can work together to drive maximum value. This approach can accelerate decarbonisation plans. But it can also increase resilience against market and cost volatility, alongside increases in carbon pricing and environmental levies.
To align different energy technologies and unlock this additional value, IoT technology is connecting energy producing and consuming assets together. This is helping to improve decisions about energy and identify areas where cost and carbon savings can be made. We continue to develop our Energy Insights Solutions and PowerRadar platform to capture more data sources and, importantly, carbon emission calculations. This data will have a critical role in helping businesses to build, track and adjust their pathway to net zero; ensuring that it is both financially and operationally resilient.
Energy optimisation opportunities
The COVID-19 pandemic has showed what a higher renewables energy system looks like. At the same time, it’s demonstrated that we need to work hard to balance supply and demand. Flexibility will be more valuable than ever before.
Businesses can generate revenue by participating in grid-flexibility programmes like demand response – which requires them to reduce or shift energy consumption to help balance supply and demand on the grid. This might involve trading battery-stored solar power or reducing large-scale industrial loads as part of a Demand Side Response programme.
Looking ahead to 2021, harnessing IoT technology allows for more precise planning of when and how to use energy. This allows organisations to maximise the value of participating in optimisation programmes and reduce the risks.
We can expect to see more and more organisations benefit from the aggregation of different types of energy assets into a Virtual Power Plant. This typically brings together a combination of flexible energy assets, such as battery storage, solar, CHP or generators, from across a number of organisations.
Since each asset has its own operational boundaries and limitations, artificial intelligence is used to decide the optimal way to use the strengths of each asset to meet the second-by-second requirements of onsite demand in interplay with the grid in the most efficient way. It enables organisations to maximise their financial returns by monetising their flexibility across multiple markets without compromising, and even enhancing, the availability or performance of their assets
Continuing the switch to greener forms of transport
The UK government’s announcement that the cut-off date for the sale of petrol and diesel vehicles is being brought forward to 2030 has given fleet managers a hard and fast deadline for making the transition to electric vehicles.
Moving into 2021, those organisations who are in the early stages of their EV transition will need to quickly understand what their future EV fleet needs to look like, and the steps that are required to get there. After all, transitioning to EV doesn’t just mean changing the type of vehicles procured. It also means a change in how – and where – those vehicles are refuelled.
Once you’ve implemented home charging for your fleet, what do you do with those drivers who can’t have at-home charging? Working patterns may need to change to enable more ‘back to base’ trips for recharging. Greater wait times might be required to enable vehicles to be re-powered. Driver routes may need to be altered to enable on-the-road charging. Processes for reimbursing drivers who charge at home will need to be implemented. Onsite energy generation solutions may be needed to enable workplace charging of your fleet, and onsite energy management software can be used to support.
Effective scheduling, procurement, logistics and energy planning can ease these challenges. But decisions will need to be made quickly on the tools and infrastructure that’s needed to support. As we move into 2021, fleet managers find themselves in a critical role for their business, with the eyes of sustainability, finance and HR looking to them for answers on how best to manage the EV roll out.
We are using our own EV fleet transition experience to support businesses with an end-to-end solution to making their switch to electric.
Maximising future energy opportunities
To maximise these opportunities in 2021 and beyond, it will be important that organisations remove any silos that exist across their energy strategy. Ensuring there are seamless connections between supply, renewables, on-site generation, insights, efficiency and optimisation will ensure maximum value from be delivered from each. Eliminating complexity will ensure these connections are made effectively and will enable organisations to build a future-proofed energy vision that delivers on the risks and opportunities of today and tomorrow.
To learn more about the changing role of energy, download our Distributed Energy Future Trends report.