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Four predictions for harnessing distributed energy in 2020

No one can be completely certain of what the future holds. However, there are a number of common themes likely to be the focus of successful energy strategies in the year ahead.

Forward thinking organisations that embrace the latest ways of generating and using energy are likely to deliver the greatest operational gains. This means informing their strategy with real-time energy intelligence; streamlining energy production; futureproofing assets, buildings and processes; and more. Most importantly, these organisations will be the ones that are best able to balance economic success, with environmental responsibility. 

As one decade comes to a close and another begins, here are four ways in which we can expect business’ energy strategies to evolve in 2020. 

The journey to net zero  

2020 will see many firms ramp up their focus on tackling carbon emissions, as the push to decarbonise grows and the journey to net zero continues to be headline news. The importance of this will be amplified in November, when the COP26 UN Climate Change Summit will see 30,000 climate experts, business leaders, politicians and citizens from around the world come together to agree further actions to tackle climate change.  

Nonetheless, the journey towards net zero carbon emissions won’t be without its challenges. Not least because energy demand is likely to increase in the future, as the world continues to digitalise and new technologies – such as electric vehicles – grow in prominence.  

In many senses, the energy system of the future will reflect the past. 100 years ago, energy was generated closer to the point of supply, often within the factories, with coal being the main fuel source. Next, everything was centralised with fossil fuels being burned in huge power stations. Over the last couple of years, we’ve seen a significant shift back to decentralised energy, albeit without the coal, where businesses are once again taking control of their own energy needs. In fact, our survey of 1,500+ energy decision makers has shown that 68% of businesses recognise they need to be more flexible in how they generate and use energy than they were in the past. 

As we move into a new decade, we are now starting to move from investment in decarbonisation at the system level (i.e. generation) to something that now needs to be made at the individual household and business level – encompassing heat, transport, and more.  

Decarbonising heat  

Over the last decade, considerable progress has been made to decarbonise electricity, largely driven by offshore wind and solar PV development. But the challenge of decarbonising heat has predominantly been left in the ‘too hard to solve’ box. Nonetheless, as we move into 2020 and beyond, it’s a challenge that will need to be tackled. Heat accounts for over a third of the UK’s greenhouse gas emissions and, since the Government has committed to significantly reduce these emissions, action will be required to decarbonise heat across all buildings and industrial processes. 

The good news is that there are already technologies in existence that can significantly decarbonise heat. These fall into two broad categories: electrification of heat products, and decarbonisation of the gas network.  

Heat pumps are a prime example of the electrification of heat products, and there are plenty of examples of them being effectively deployed across Northern Europe. However, they cannot solve the whole decarbonisation of heat problem on their own. If heat pumps were the only technology in action, the draw from the electricity grid during peak times may be too great for the grid to handle.  

With this in mind, it’s also important that investment is made in technologies to decarbonise the gas network. Good progress has been made here, by building anaerobic digestors which inject biomethane into the existing gas grid. Hydrogen produced by electrolysis – powered by renewable electricity – is another option for reducing carbon. Industry, government and business collaboration is required to bring local level hydrogen production into the mix this decade. A combination of these technologies and solutions will be needed, in order to decarbonise heat to the required levels in 2020 and beyond.  

Continued EV development 

Electric vehicles are crucial to decarbonising transport and improving air quality, while also delivering financial and reputational benefits. Recognising these benefits, organisations like Dundee City Council are increasingly making the transition, by introducing EVs into their commercial fleets, providing at-work charging for employees, or turning car parks into EV friendly spaces. In fact, our survey of 1,500 energy decision makers found that 77% of organisations are looking at options to electrify transport, or offer EVs to employees; and 68% of organisations see EV as a path to reducing fuel costs associated with fleets. 

As EVs become the new norm, we can expect customer expectations of them to grow in the months and years ahead. Businesses and consumers alike will be looking for ever-faster charging options. 2019 saw Tesla unveil it’s first 250KW chargers, and it’s likely that other manufacturers will be looking to follow suit in 2020, in pursuit of winning the hearts and minds of buyers. 

Looking further ahead, progress is being made to embed ‘smart charging’, to provide EV owners with financial rewards for charging their vehicle during predefined periods, when there is lower demand on the grid. Even further into the future, steps are being taken to introduce ‘vehicle to grid’ charging, whereby EVs feed electricity back into the grid when required – but this is likely to be developments for later in the decade. 

New regulations 

Throughout 2020, we can expect a number of regulatory changes to be made to the UK’s energy market, which will impact the ways in which energy is generated, managed and used. 

The National Grid ESO will deliver reforms to the products it procures to manage the electricity system. This includes the introduction of new frequency response products, which Centrica Business Solutions can help organisations to access. In addition, the Electric Vehicle Taskforce will publish its recommendations on the key steps that need to be taken before 2025, in order to decarbonise the transport industry. Finally, the Committee on Climate Change will set its sixth carbon budget this year, which will set  the level of decarbonisation that’s required in the UK between 2033 and 2038, and the actions required by Government to enable this. 

From a Government policy perspective, in 2020 we can expect a new energy white paper to be published, to provide clarity on how the UK can transition it’s energy system to one that can meet its new net-zero target. We can also anticipate a roadmap being produced that will provide direction on how the UK will approach low-carbon heating. 

Moving into 2020

With a holistic approach and a clear roadmap for energy technology investment, organisations can stay ahead in a changing energy market. Centrica Business Solutions can help. By harnessing a decentralised approach to generating, managing and optimising energy - underpinned by a range of proven technologies and solutions - organisations can reduce carbon emissions, cut energy costs, maintain energy resilience, and transform energy into a strategic asset that delivers tangible business results. Learn more about the ways in which Centrica Business Solutions can unlock the power of distributed energy for your organisation.