The UK’s energy infrastructure is preparing for big changes, as we make the transition to lower-carbon and more diversified forms of power generation.
A decrease in coal-fired power generation, more small-scale renewable generation, greater decentralised energy management and the development of a ‘smart’ grid are all part of the move to a more sustainable energy system.
According to the latest statistics published by the Department for Business, Energy & Industrial Strategy (BEIS), total greenhouse gas emissions from the energy supply sector fell by 42% between 2010 and 2016.
But to achieve the UK government’s overall goal of reducing the country’s emissions by 57% by 2030, and by 80% by 2050 (on 1990 levels), we still have a way to go.
Stick versus carrot
The problem for consumers, however, is the cost. Many energy intensives feel that the impact of low-carbon levies on UK energy prices makes it harder to compete in international markets, even with the various exemptions in place.
But while levies and other rising non-commodity costs to fund our low-carbon transition make power more expensive, there are also opportunities to save money.
Along with the ‘stick’ of disincentivising energy use via higher costs, there is also a ‘carrot’ of earning revenue for being flexible around use.
Already, the largest consumers are able to save six figure sums by reducing demand at peak times (although in practice, this is more complex than it sounds).
Others can earn revenues for utilising on-site generation or battery storage when asked by National Grid to do so, as part of a range of Balancing Services.
The move from consumer to prosumer
This move from passive consumer to active ‘prosumer’ is likely to extend beyond the largest energy users.
As local Distribution Network Operators (DNOs) transition to we may see local balancing services offered to a wider range of consumers.
The rollout of Smart meters to homes and smaller business sites could lead to more Time of Use tariffs being offered, to better manage energy consumption away from peak times (for example, by making it far cheaper to charge electric vehicles at night).
Business supporting action
Businesses themselves seem keen to see more being done to achieve the UK’s emissions reduction targets.
Back in December, research we commissioned to gauge business response to a proposed new energy reporting framework, found that 87% believed it would drive a nationwide reduction in companies’ energy use, bills and carbon emissions.
Many leading businesses have also formed coalitions to accelerate the low-carbon transition. For example, We Mean Business has 665 global members (with a collective market cap of $15.7 trillion) working together to commit to ‘bold climate action’.
According to their research, businesses who embrace a low-carbon strategy see an average internal rate of return of 27% on investments (for example in more energy efficient processes).
Embracing a low-carbon strategy pays
Last year, a report into the Fortune 500 found that companies including Microsoft and IBM are saving “tens of millions of dollars every year” through measures to reduce emissions.
Energy efficiency projects alone were generating $3.7 billion in collective annual savings for the top 190 companies (see more in our blog).
Embracing more sustainable ways of doing business is also seen as essential for future success.
A recent survey by strategy consultancies Globescan and SustainAbility suggests that over the next decade, the world’s leading organisations will be defined by their ability to integrate sustainability into their core business model.
To find our how ‘decarbonising’ can benefit your business, speak to your Client Lead (for existing nBS customers). Or email us at nBS@npower.com.
Also watch out for our forthcoming blog on how moving to lower-carbon forms of energy is set to change the way our local distribution networks operate.