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.

An audit for audit’s sake doesn’t make for good practice

Louise Kingham OBE FEI

Louise Kingham OBE FEI

You could be forgiven for struggling with the DECC’s published guidance on ESOS as it’s not an easy read but, in the Department’s defense, the devil is always in the detail so DECC is obliged to set it all out.

The EI, as a supporter of ESOS with resources to enable its implementation, has produced a simple guide to help senior executives of companies that must comply with this new mandatory scheme to complete energy assessments and identify energy savings opportunities. Broadly speaking, if your UK business has

1) 250 or more employees
2) an annual turnover of more than 50M Euros and
3) a balance sheet of more than 43M Euros

you and any other UK organisations will need to comply. There are nuances to all of this so it’s worth reading the detail or contacting DECC for advice well ahead of the end of this year.

Compliance requires you to estimate your total energy consumption and audit the areas of most significance for a report which is signed off at company board level and lodged with the Environment Agency.

Now that’s where compliance stops and good practice starts. Why? Because it’s good for the bottom line and can turn loss into profit, it’s good for the environment and demonstrates the social pledges companies can make and the benefits that can be passed onto the customer. So don’t stop at the filing of the report, don’t even stop when you celebrate the first year’s energy and financial savings. The clue is in the title – energy savings opportunity scheme….

Setting standards

Louise Kingham OBE FEI

Louise Kingham OBE FEI

Last week I had the pleasure of meeting people from around the world, brought together by the fact that we were all part of the energy industry, and in this case, focused on sharing knowledge in the oil and gas sector at the 21st World Petroleum Congress in Moscow. A common worry during the event was the bottleneck that the industry is facing across the board – albeit to different degrees in different geographies – to attract, develop and retain a talented, diverse and competent workforce, in a range of key roles where we know gaps exist, from technicians to the next industry leaders. This was confirmed at the session I chaired later in the week on that very theme.

Back in the UK, the topic of standards and accessing the competence to attain them reigns strong. Why? Well, this week, the Energy Savings Opportunity Scheme is launched – to help the UK to meet Article 8 of the EU’s Energy Services Directive. This means large companies will need to regularly audit their energy performance – using competent people to do so. As the industry’s professional body, the EI has been advising the UK Government about what competent in this context means – reflected in the membership of the EI’s Register of Professional Energy Consultants and so we are ready to support the scheme. Ultimately, competence is essential for the industry to operate to the highest standard, whether in drilling oil wells or identifying opportunities for energy saving. But there’s another reason why we should worry. If the energy industry is to gain public trust, demonstrating the competence of its practitioners will go a long way to help.