energy efficiency

The three S approach to uncertainty

Ian Marchant

Ian Marchant FEI, Immediate Past President

Life seems to be getting more and more uncertain. We are being warned about a Brexit rollercoaster and the oil price, at least in percentage terms, seems to be doing a good impersonation of an elevator; up one minute, down the next. All this uncertainty makes decision-making complex , especially when they concern long-life assets.

Against this background I have been thinking about the question of energy independence. Whilst, in my opinion, this isn’t necessarily a good goal at the national or even local level in its own right, I do believe that investing to reduce one’s dependence on and exposure to both the volatility of the global energy markets and the resilience of local energy distribution systems is something to be considered.

This is where, I believe, a combination of three Ss comes in: solar, storage and software. The cost of solar panels has come down enormously over the last ten years or so but the economics still depend upon support mechanisms, partly because of the profile of solar production. That problem will always be with us and that is where storage comes in.  Installing a suitably-sized lithium ion battery in the home or office allows much more of the solar power to be used on-site and this significantly improves the economics of the whole installation. The third leg is energy management software that can optimise on-site demand (which could include decisions on when to recharge a plug in an electric vehicle), to match the availability of locally produced or stored electricity. The same software can also be used to decide when electricity should be exported and when imported from the grid, an increasing source of value as we move to time of day pricing. Finally, the same software can work out when the stored energy can be used to provide support services such as frequency response to the local grid or through aggregation to the national grid. It really is the combination of the three that makes all this work.

Investing in solar, storage and software may not mean complete energy independence but it will certainly reduce exposure to energy uncertainty and will be an increasingly good investment in its own right. We are seeing commercial offerings starting to emerge in this space and I’m sure there will be more to come.

Moving energy management forward

Dr Joanne Wade FEI

Dr Joanne Wade FEI

Energy efficiency is increasingly valued at all scales. ESOS has brought awareness, and possibly action, to large organisations. SMEs are increasingly aware of the benefits, from both a cost perspective and a reputational one of managing energy to achieve greater efficiency. The EI’s recently published Energy Barometer report revealed that energy professionals across sectors (on both the demand and supply side) and disciplines value energy efficiency and management and recognise its potential to transform the way energy is consumed.

Among the top concerns that EI members are grappling with in 2016 is of course the low oil price and its impact on investment and decarbonisation, drawing focus from energy demand and efficiency. Despite this competition from low crude oil and transport prices, commercial and domestic energy efficiency are seen as the only low-risk areas for investment across the energy value chain. Efficiency (in buildings, transport and industrial processes) also tops the list for where energy professionals believe investment should be increased. But energy professionals caution that policy stability is imperative to take advantage of this potential, enable investment, and develop the sector. Recent changes to the Green Deal and the Zero Carbon Homes policies are not the signals that are needed. Energy professionals expected a decision to leave the EU to have a negative effect across most of the energy sector, including on improving energy efficiency, and general market uncertainty following the vote on 23 June is indeed affecting investor confidence. This reinforces the need for a new, robust policy framework to encourage investment.

The EI has long been supporting the development of energy management as a profession, promoting good practice and recognising those at the top of their field. A new publication, released in May, is aimed at those who are new to energy management, of which there will be growing numbers as more organisations embed energy management in their strategy and operations. A guide to energy management gives a high-level introduction to the what, why and how of this practice, and is aimed at those considering a new career or anyone who has been asked to take on energy management alongside an existing role. It can also be a useful tool for consultants pitching to senior management teams, helping to make the case for and explain the basics of managing energy in an organisation.

The guide is part of the Energy Essentials series produced by the EI Knowledge Service – foundation-level documents which help to promote knowledge and understanding and make important topics understandable to non-experts. The documents in this series are reviewed extensively by qualified subject specialists under the guidance of the Energy Advisory Panel, which I chair. The guide to energy management serves an important purpose and I hope it makes this field more accessible and easily understood, particularly in those organisations with limited resources or for individuals with little technical background.

Both the Energy Barometer report and our new guide are examples of the EI’s efforts to promote knowledge, share information, and enable informed discussion about energy. Both are also only made possible by the generosity and expertise of our 23,000 members, who never hesitate to put their views and insights to good use. Thank you to the EI College and to our 60 peer-reviewers for your input, which is improving the quality of the debate and hopefully enabling the changes needed to move the industry forward.

Small is beautiful

Ian Marchant

Ian Marchant FEI Immediate Past President

The book Small is Beautiful by economist E F Schumacher was originally published at the time of the 1973 oil crisis. To quote Wikipedia “It is often used to champion small, appropriate technologies that are believed to empower people more, in contrast with phrases such as bigger is better”.
I think these words could usefully be applied to the challenges facing the energy industry today when we are facing different challenges that may, with the benefit of hindsight, look like an energy crisis.

The last hundred and fifty or so years have seen the energy industry fixated with bigger is better. It has been about the larger power stations, heavier and deeper offshore platforms and bigger companies. I think this is, however, yesterday’s trend. The future is smaller, more distributed and local. Here are four illustrations.

  1. More and more homes, schools and offices are fitting small solar systems and now this is frequently being combined with local storage. You can now install lithium ion batteries that are smaller than conventional gas boilers which means that all of your solar produced power can be consumed on-site. These are small, personal decisions which are democratising and disrupting the big centralised electricity system.
  2. The rise of unconventional oil and gas has transformed the economics of the fossil fuel industry. Regardless of the controversy around fracking, one thing is clear. These wells are quicker and faster to develop than the pieces of giant industrial architecture that dominated the industry until recently and this is changing the nature of the commodity cycle and the politics of the energy industry.
  3. Even the nuclear industry is being affected. If the 1600MW Hinkley Point C ever gets built, I suspect it will mark the final death throes of the bigger is better mentality. The focus is now on so-called small modular nuclear reactors which may be a fifth to a quarter of the size of Hinkley and stand a sporting chance of being connected with words not normally associated with nuclear power; ‘on time and on budget’.
  4. The market share of the big energy suppliers has been in steep decline recently and we have seen the emergence of a range of smaller competitors with different business models as well as the growth of collective and mutual owned energy suppliers. I suspect that this trend is going to be a consistent feature of the market.

The challenge for the energy industry will be how it copes with the disruption that is bound to occur as we move from a bigger is better world to one where small is beautiful and diversity of scale is a strength.

Joining the dots is a big ask…

Louise Kingham, EI Chief Executive

Louise Kingham, Chief Executive, Energy Institute

But it is not an impossible one in my view. Those of us that spend time working on it know only too well that energy policy is complicated. A book I have just finished reading illustrates it from the perspective of a former Secretary of State for Energy, which in itself was illuminating (for someone like me who has not worked in politics or the machinery of Government). But it wasn’t that that caused me to turn the pages, it was his central message that caught my attention because it’s something I have also been thinking about.

How do we get beyond the politics and other influences around ‘energy decisions’ so that we can actively evolve a system where traditional and new forms of energy sit alongside each other acceptably – increasing capacity and reinforcing the security of the system – which is not for a lack of fuel sources and, at the same time, drive energy efficiency, reduce energy intensity and carbon emissions in a connected and planned way? How do we do this rather than pitch options against each other when in reality all that does is make the macro outcomes – security of supply, emissions reduction and affordability – all the more difficult to achieve. Indeed some would go further and say energy decisions thus far have put us back, not moved us forward –  a view shared by the author of the book I refer to.

If the answer were simple and didn’t require great bravery, as well as ingenuity, then we would already be there. But, in the meantime, the EI has a responsibility to raise the debate and try to move the conversation forward. I hope a couple of forthcoming events and the publication of the EI’s second Energy Barometer report will help to do that. Firstly, our partnership with Elsevier brings you the Energy Systems conference on 14-15 June at the QEII Centre in London. At breakfast on the 15 June we will launch the second Energy Barometer report at the same venue and, later in the month, on 28 June in London, Sir David King HonFEI will receive the EI’s Melchett Award and give a lecture about the energy transition as he sees it. I’d commend all these events to you and encourage your participation to help move the conversation forward. I am also considering other events later in the year that we can host to debate specific aspects of our evolving energy system so if you have ideas to share with me on that then please feel free to get in touch – lkingham@energyinst.org

 

We don’t want energy storage

Ian Marchant

Ian Marchant FEI, Immediate Past President

Claiming that we don’t want energy storage seems like a provocative thing to say. For example, the Energy Institute (EI)’s 2015 Energy Barometer report, a survey of professionals in the energy industry, rated storage as the area most in need of innovation. My point isn’t that energy storage isn’t important; it is. My point is that, of itself, it’s not something we actually want. You don’t hear people say that what they want for Christmas is just some simple energy storage along with some socks and a chocolate orange!! In thinking about the technicalities of energy storage we should first think about what we actually want and I believe we want two things: RESILIENCE and FLEXIBILITY.

Let me illustrate with the energy storage that most of us are familiar with, even if we don’t recognise it as such; the fuel in the tank of our car. The typical fuel tank holds 50 to 60 litres of fuel that gives us both instant flexibility even on a cold morning (modern cars are so good at starting nowadays) and a couple of weeks worth of resilience assuming average mileage. Indeed, if we knew there was a supply crunch most of us could probably stretch that full tank for a month or so by car sharing, using public transport and the like.

So that unseen energy storage which comes free when you buy a car and only ties up £50 to £60 in fuel gives us a lot of resilience and flexibility in our mobility. The energy system that has evolved over the last hundred years or so has embedded within it quite a lot of hidden resilience and flexibility. As well as our car fuel tanks we have petrol and diesel at filling stations and tank farms, we have piles of coal at our diminishing number of coal-fired powers stations and we have natural gas in the network of pipes, in dedicated storage facilities like Rough and Hornsea and offshore where at some fields production can be ramped up quite quickly.

However, the energy world is changing. We need to decarbonise our electricity system and then the rest of our energy system. This second stage is likely to increase the role of electricity in meeting our heating and transport needs. The problems are that firstly our current electricity system only has embedded in it the resilience and flexibility that the current uses of electricity needs, and secondly what little already exists is in decline principally as old coal stations shut.  This is exacerbated by the fact that  low carbon forms of energy, be they renewables, nuclear or clean fossil fuels, are not currently known for their inherent flexibility or resilience. So we will be faced with less of what we need just when we start needing more. What will happen when our electric car battery needs to be recharged at the same time as our heat pump needs to work and we want all our lights and gadgets to function but it’s a still calm night?

This is the reason why so many energy professionals put energy storage at the top of their innovation agenda. In deciding on where that innovation should be targeted we need to think about what level in the electricity system we can best provide resilience and flexibility. There are four possible levels: the source of demand (our home for example); the local area (think of the transformer at the end of your street); the generator itself; or the grid as a whole. The answer may be a combination of all four levels and, importantly, may be different for resilience than it is for flexibility. It will be determined by things like economies of scale, the efficiency of sharing the capabilities with others (we don’t all need to meet our own maximum flexibility – if we can pool with others then the flexibility needs of the system will be less than the sum of all the individual needs) and the value of providing security close to demand. I have a hunch that the answer may involve local or even domestic level resilience and generator or grid level flexibility but time will tell.

Debate about energy storage tends to get dominated right from the start about technology, be it batteries, phase change material or pumped storage hydro. However, we need to separately assess our current and future needs for resilience and flexibility, then decide at what level in the system that need can be most efficiently met and only then determine the choice of technology. We have to put needs before technology.