Organisations must go faster and harder towards decarbonisation in 2022 – not only to tackle climate change, but also to combat rising energy costs and improve resilience. In this blog we take a future look at 6 trends and technologies that will shape the sustainable business energy agenda in 2022 and beyond.
Our recent net zero research report shows that a progressive approach to energy can bolster balance sheets and support recovery from the impact of COVID-19.
There's a growing cost of inaction on net zero – both in terms of damage to planet and profit.
In 2022 it will be increasingly important to get ahead of tighter regulation, higher energy costs and rising carbon taxes. In this way, organisations can guard against risk and protect long term commercial viability, while also capitalising on advanced energy opportunities and incentives.
Both the UK and EU emissions trading schemes hit record highs towards the end of 2021. There is an intention to align the UK scheme to the national net-zero target from 2024 onwards, which is likely to mean more organisations face higher carbon prices
There are clear signals that businesses and public bodies must take accelerated action to tackle the climate crisis. Following COP 26, nearly 200 countries have agreed to a new Glasgow Climate Pact and around 90 per cent of the world is now covered by net zero targets, compared to only 30 per cent two years ago.
We have brought forward our own net zero target to 2045, while also helping our customers to be net zero by 2050.
A science-based approach to net zero will drive a higher integrity approach to carbon reduction and will make corporate green washing more difficult.
Initiatives such as the new Net-Zero Standard will provide a clear framework for investors, customers and other stakeholders to hold businesses to account on the effectiveness of their decarbonisation and reporting strategies.
Green energy procurement will come under increasing scrutiny in 2022. Organisations will better understand the importance of Renewable Energy Generation Origin (REGO) certificates and similar proof that energy is from an identified renewable source.
More customers will also use Power Purchase Agreements (PPAs) and become more selective in choosing products that support funding of additional new renewable generators, resulting in 'additionality'.
We currently provide zero carbon electricity to all of our business customers in the UK as standard. Last year, this saved organisations 1.4MTCO2e. In 2022, we expect more organisations to demand green energy tariffs, including green gas for Combined Heat and Power (CHP) and other heat systems.
Renewable energy was one of the big winners from COP26, including a 'Breakthrough Agenda' commitment to make clean power “the most affordable and reliable option” for all countries and to phase out coal.
The IEA forecasts that the global renewable energy generation capacity will increase by 60% over the next 5 years. The UK is leading the way with its commitment to generate 100% of power from renewable sources by 2035, including plans to ban coal by 2024. In its latest Contracts for Difference (CfD) round, the government has increased funding to £285 million.
Over the next 5 years, we aim to develop, build, manage and optimise a further 650MW of solar capacity together with battery energy storage systems as part of our Centrica Energy Assets project, which will help provide our customers with clean energy and could increase our low carbon assets by around 900MW.
We've completed 85MW of solar PV projects, including the recent installation of a 4,000 panel project for the British Army. We're also installing nearly 2000 solar panels for Affinity Water as part of a wider distributed energy project.
The explosive growth of renewable energy will drive electrification of heat and transport – enabling the switch to heat pumps and the continued growth of electric vehicles.
In 2022 many more organisations will exploit advanced energy optimisation opportunities to manage higher energy costs, while also helping to stabilise the grid, balance supply with demand and enable higher utilisation of solar and wind power.
With falling cost of batteries, there has never been a better time to maximise financial revenues from flexibility and minimise risks from investing in renewable generation and battery energy storage systems (BESS).
Continuing market volatility and high energy prices will provide opportunities to use battery storage for peak power avoidance and to capitalise on flexibility revenues from higher balancing costs.
New flexibility market opportunities in 2022 will include the launch of National Grid's Dynamic Moderation and Dynamic Regulation frequency response services.
Bloomberg New Energy Finance is forecasting global 20-fold expansion in non-EV battery capacity over the remaining decade, while the UK government believes that a smart and flexible energy system will reduce costs to consumers by an estimated £10bn per year.
We can expect to see more organisations using IoT energy insights technology both to improve energy and operational efficiency and to inform optimisation opportunities. This is essential in managing aggregation of flexible energy assets to maximise financial returns and minimise risk from Virtual Power Plants.
EV smart charging software will also play a growing role in optimising power and storage loads to meet grid and site needs.
One of five 'Breakthrough Agenda' aims of COP26 is for countries to work together to make 'affordable renewable and low carbon hydrogen globally available by 2030.'
In 2022 we will see major progress in early stage projects that will prove the viability of using hydrogen to meet the growing challenges of power and heat decarbonisation and longer term energy storage. Government analysis reveals that by 2050 hydrogen could represent 20-35% of the UK’s energy consumption.
As members of the Hydrogen Taskforce, we're committed to exploring commercialisation opportunities, including rolling out hydrogen ready boilers and CHP systems. We've recently acquired a minority stake in break-through hydrogen production technology company HiiROC, while we're also exploring the future role that our Rough gas field could play by repurposing it into a hydrogen storage facility.
Using hydrogen as an alternative to natural gas in heating systems, such as CHP, has great potential to provide a simple way to reduce emissions in the long term, particularly for industrial processes that require high intensity heat.
We expect to see accelerated growth in the EV market during 2022 – led by businesses and public bodies in switching to zero emission fleets and public transport systems.
We're making strong progress in delivering on our own target to electrify our 12,000-strong fleet of vehicles by 2025, while also enabling customers such as ABB UK , Stagecoach, Ford, Vauxhall, Volkswagen and Lotus to roll out EV. We aim to install 23,000 EV charging points this year.
With just 8 years to go until the ban on sales of new petrol and diesel cars in the UK, nearly 30 other countries have committed to transitioning to 100% zero emission cars and vans by 2040 or earlier.
Government policy on EV is clear, including a planned Zero Emission Vehicle Mandate and a new requirement for all new buildings and major renovations to install charge points from next year. It is critical that the UK builds more on-street and rapid charging capacity to unlock rapid market growth.
EVs will add a significant load to the grid, which could put a large burden on the power network. We expect to see advances in smart charging and Vehicle to Grid (V2G) charging technology that will help optimise power and increase the economic viability of installing on-site renewables and storage for use in charging vehicles.
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