UK Business – Take Note There is an Energy Revolution Going On

February 13, 2017

Mark Wakeford, Managing Director of EvoEnergy, puts forward his views on the changing landscape of the energy market and why businesses need to act now.

“An energy revolution that is being driven by consumer choice or necessity? Twenty six power stations have been decommissioned since 2010 and forty three more are forecast to close by 2030 as the Government ban on coal fired generation bites. This amounts to over 50% of the 2010 generation capacity. The opportunity, I suggest, lies with the National Grid, our monopoly provider.

The National Grid has forecast that it will invest some £83m this year in the electrical infrastructure. This might sound like a great deal, but on an asset base of some £11.3b, this anticipates an average asset life of 136 years (at zero inflation). Those of us in the solar and large scale battery sector are well aware of the hot spots within the UK where it is not possible to connect generating assets and we might expect that an “energy revolution” might place additional demands on National Grid, not less.

The Government has approved Hinckley Point power station to be built at a guaranteed price of electricity, paid by the electricity bill payer at £92.50 /MWh, which is around double the currently available wholesale price. One might reasonably assume that the Government anticipates electricity prices to reach these heady heights by the time that this generator comes on line in 2025 (?). This represents a doubling of wholesale prices and an electricity rate of inflation of some 10% pa. Whilst Government may try to insulate the public from such increases, business rarely enjoys the same protection.

Companies need to be aware of the direction of travel and to recognise that as economically available electricity should not be taken for granted.

Forward thinking companies (and their advisors) should consider securing grid capacity ahead of their competitors, where all users are competitors competing for this capacity. Install as much PV, or other renewable energy source as the user and the local grid can accommodate.

This will protect companies from rapidly increasing electricity bills for energy that they generate and also support their ESOS reporting. An additional benefit is an ability to potentially benefit from new storage technology. This will give forward thinking companies a commercial edge over competitors who do not move so quickly and may find insufficient capacity in their local network remaining.

EvoEnergy is busy advising many larger users on how to benefit in this way. What I find interesting is that we are now getting enquiries from developers who are looking to protect their investments. There is indeed an energy revolution going on.

Ignore it at your peril.”

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