Energy Entrepreneurs are leading the UK smart power revolution

Sensemaking / Energy Entrepreneurs are leading the UK smart power revolution

Over the last five years, SmartestEnergy’s annual Energy entrepreneurs reports have tracked the activity of independent renewable generators, who have played a huge role in developing the supply of renewable energy in the UK.

By Mike Shirley / 09 May 2017

Energy entrepreneurs outside the traditional electricity supply sector now supply 8.6% of UK electricity demand. They have invested £2.75 billion in over 6,400 renewable projects with a combined capacity of 12.75GW – enough to power 7.8 million households. To put their achievements into context, the controversial Hinkley Point C nuclear plant will provide enough electricity to power 6 million homes, will cost £18 billion and take ten years to build.

Independent energy entrepreneurs are the vanguard of the UK’s energy system; introducing new technologies, business models, value networks, relationships, identities and new stories about what’s possible. You could liken them to pioneer species driving a chain of ecological succession in our energy system as it feels the effects of climate change legislation.

How did energy entrepreneurs fair in 2016 and what impact are they having in 2017 so far?  

Here are main findings of our 2017 report:

For the first time in the UK, there’s now more installed solar capacity than wind.

The independent renewables landscape has seen dramatic growth and change since we began tracking the sector with our first Energy Entrepreneurs report in 2012. In just four years, energy entrepreneurs have invested £1.5 billion in renewables, nearly tripling the UK’s independent renewable capacity from 4.72GW in 2012 to 12.75GW in 2016. Solar has grown eight times faster than onshore wind since 2012 - accounting for two thirds of the most recent 8GW - driven by rapidly falling costs and technological advances which have made generation more efficient.                   

Sudden policy changes have made the conditions for starting new, independent renewable energy projects less favourable: the UK has slipped from 4th to 14th place in EY’s index attractive countries for renewable investment

The UK Government made sweeping cuts in renewable subsidies and ended the Renewables Obligation for solar and onshore wind early last year, causing investment in renewable energy projects to fall from around £400 million a year from 2013-15 to £280 million. More than half of new independent renewable projects were commissioned before March, the deadline for small-scale Solar PV accreditation under the Renewables Obligation. Just 38 new projects were completed in the last three months compared with 104 over the same period in 2015 and 526 in 2014.

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Energy entrepreneurs are responding to these conditions by shifting their attention and by doing for battery storage what they’ve already done for renewable energy.

Batteries are starting to win contracts in the Capacity Market (the market set up to allow the National Grid to buy top-up electricity supplies to meet winter peak demand and smart services for shifting demand in real-time). A total of 153 battery storage projects, with a combined capacity of 2.3GW, have announced plans for deployment over the coming four years - and it’s conceivable that UK battery storage could be 100 times greater by 2020.

In 2016, independent energy entrepreneurs are playing a key role in developing storage and demand-side response technologies. Independent developers have won 80% of battery contracts in Capacity Market auctions, securing 407MW while just 105MW went to projects from “Big 6” utilities. Interestingly, the majority of this -  270MW - was secured by independents with renewable projects who’re able to deploy batteries quickly, using grid connections and infrastructure on existing sites.                

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By growing storage and demand-side response technologies, they are allowing our existing renewable capacity to produce a greater share of the UK’s power.

The next challenge being confronted by energy entrepreneurs is the need to evolve our energy network for more renewable energy. Fossil-fuel power stations behave very differently to intermittent renewable energy so we can’t tap-into these alternative sources of power without changing the way our network operates. In 2015, we paid £15 million to wind farms not to generate power because the wind was blowing at a time when the grid couldn’t handle the surge. This is wasting energy: it’s a situation that makes renewable generation less economical and means the grid can’t make use of the low carbon power.

Batteries make intermittent wind and solar generation efficient and economical by storing energy when there’s a surplus and then making it available when it’s needed. The more batteries on our network - and the more we can vary our energy demand in response to fluctuations of renewable power - the less renewable capacity we will waste and the more we’ll be able to use.   

Independent Energy Entrepreneurs are driving the transformation of our energy system.

Their new ventures are evolving our existing system to make it better-able to optimise renewable energy to meet the UK’s climate change commitments. Alongside setting us up for a renewable energy mix in the future, this modernisation could help to save energy consumers £8 billion by 2030 by making our existing infrastructure more efficient, therefore cheaper, to run.

Mike Shirley is Head of Marketing at SmartestEnergy

About us                           

SmartestEnergy is a different type of energy company. We’re changing the way that businesses buy, sell and use energy, and shaping the future energy mix to be more renewable, exible and smarter.                  

We are Britain’s leading purchaser of electricity from independent renewable generators, buying directly from nearly 500 projects across the UK. We also supply electricity to over 1,000 businesses and are the rst company in the UK to offer Carbon Trust Certified 100% renewable electricity.

As we decarbonise, decentralise and digitalise the UK energy system, new opportunities are emerging for energy entrepreneurs. We’re helping our customers capitalise on their assets by developing innovative commercial structures.

 

Sources:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/505218/IC_Energy_Report_web.pdf

 

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