All change please…

Louise Kingham

Louise Kingham OBE FEI,         Chief Executive, Energy Institute

 

 

 

In the last few months I’ve been involved in various settings – apparently co-incidentally- discussing how the energy industry is set to change and in some cases why it needs to, as well as what those drivers for change might be. For me this obviously directly leads to discussion about how the EI as a professional body and learned society with a unique proposition promoting and advancing energy knowledge, skills and good practice should prepare. The fora for these discussions have been varied – workshops about the role of a 21st century Institute; our own Brexit and Energy debate, listening to a keynote speaker talking about the outcomes of the CMA report, taking part in discussions promoting diversity of thought and better balance in energy companies, engagement in a review of how the engineering community is organised and of course the EI’s own consultation process with members and other key stakeholders about its future strategy. These are conversations I relish because they make you think and challenge the status quo. Some would say I like them too much but I think it’s what keeps you relevant and ready to adapt when it’s right to do so. They also challenge your creativity.

But it’s important to recognise that many fear change – in quite a natural way because it’s a fear of the unknown and a disruption to a comfort they understand. But for the energy industry, I believe there are some real challenges which mean there are opportunities to harness. Whether it’s putting the customer at the heart of the electricity system in a way which is ‘smart’ and makes best use of technology, or whether it’s new lower carbon business models for organisations heavily invested in fossil fuels. And there are many more I could mention. The point I leave you with is that the EI thinks long term, sees the opportunities and is ready to support energy professionals and their organisations on their journey.

P.S. Change can also bring frustration so if you have downloaded the latest apple operating system on your iPhone and iPad and now find your email tricky to work with go to settings, mail and switch off ‘organised by thread’. Members I’ve shared that one with this week have been delighted!

 

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.

Gearing up for the EI’s 2016 Energy Barometer

Louise Kingham OBE FEI Chief Executive

Louise Kingham OBE
Chief Executive

Although we only published the first Energy Barometer this year, it has already become a widely recognised and understood report by those that help to shape the energy world we, as energy professionals, work to sustain and develop.

From its launch in the Palace of Westminster to the desks of CEOs, to the offices of Ministers and senior civil servants to the national, local and trade media, the Barometer has travelled far and wide, encouraging debate and development of the discussion around knowledge transfer, innovation in energy developments, investment in energy technologies and engagement with customers. The EI has also begun work to address solutions to some of the challenges members raised.

Now it is time to develop the 2016 report. In 2015 we invited some members to form a College. We will soon be sending out invitations to some existing College members and, as we promised, extending membership of the College to new participants to balance continuity with the opportunity for wider participation among the Fellowship and Graduate members in particular. We hope you will want to contribute to this important work.

Officials within the Department of Energy and Climate Change (DECC) are also getting involved this time around to enhance the direct effectiveness of the useful resource that the Barometer has already become. The Barometer is an essential conduit for the energy professionals’ evidence to be heard – I hope you will add your voice to it.

Experience is something not easily transferred but must be keenly shared

Louise Kingham OBE FEI Chief Executive

Louise Kingham OBE
Chief Executive

The EI’s inaugural Energy Barometer report of members’ views on the industry’s important future challenges identified that developing a pipeline of energy professionals was a key concern for those at the heart of the energy industry today.

Respondents emphasised the urgent need to maintain the supply of skilled workers into established and developed sectors. They also express the need to preserve and transfer the knowledge of those preparing to leave the industry to a new generation. This is much talked about as an issue and there are some great examples of good practice within a number of companies in the sector, but it is incumbent in my view for every experienced energy professional to keenly share their knowledge and offer guidance to those that will succeed them. This way we ensure experience isn’t lost and good practice is shared.

As hosts of the POWERful Women initiative we have just launched POWERful Connections – a mentoring scheme led by CEOs in the industry to support those looking to lead the industry in the future. I was delighted with the overwhelming support we had from CEOs we approached to be mentors but interestingly those who could be mentored were not so ready to jump forward without encouragement. Currently we also support individuals with a mentor to help them achieve professional membership. Great support for the early professional and a complement to a mentor’s own CPD. These are two examples of what we do, however, we recognise that more needs to be done and we have plans to expand our offering to energy professionals here because support is needed across all demographics and for those returning from career breaks or with transferable skills from other industries.

As well as each of us encouraging others to be mentored and offering our support to do so we also need to develop programmes that are flexible, practical and light on administration to make them effective. As recognised energy professionals, please feel free to get involved.