Will the cost-of-living crisis drive a more dynamic energy market?

Will the cost-of-living crisis drive a more dynamic energy market?

By Craig Topley, Managing Director, Construction

Just about everyone is feeling the pain of rising energy costs.

However you look at it, this does feel like a moment in time that will profoundly influence the future shape of energy generation and consumption.

Already, the rapid rise in energy bills has prompted a 300% surge in demand for solar panels compared to two years ago. Investment in local power generation, whether by individuals, housing developers or communities, is on an upward curve – augmenting the larger-scale renewables projects run by energy businesses. The net effect of this action will be a reduction in greenhouse gas emissions which, while positive news for net zero, will be overshadowed by economic reality in the short term at least.

As a country, the current crisis means we’re probably more aware of our energy infrastructure than at any time in recent history. We also know that demand for electricity will increase to support the phasing out of domestic gas heat in newbuild housing by 2024/25 and the growth in electric vehicle charging.  

Our evolving role in electrification

We provide both the utility construction services and the local network management that’ll be part of an increasingly flexible energy market. The concept of augmenting national grid power with locally generated electricity, stored in a battery and topped-up by vehicle-to-grid technology could become commonplace. At the same time, the move to half-hourly metering should incentivise cheaper time-of-use tariffs as energy providers encourage us to use and store excess power generated by renewables.

As network owners, we’re already implementing smart AI systems and data streams that enable power capacity to be effectively managed on constrained sites. We’re also at the forefront of both the standardisation of EV charge point design and infrastructure expansion in partnership with some of the biggest brands in this market. Here, we’re ensuring that sites we adopt are future-proofed to accommodate faster and bigger charging stations.

We’re also focused on this changing landscape, by upskilling our people to support this evolution, working with developers to future-proof network construction, and partnering with energy suppliers to implement innovative data-led solutions that better manage capacity. 

And, of course, we’re also adapting our own working practices, offsetting all fleet carbon emissions, implementing an EV/hybrid vehicle policy, and delivering a comprehensive energy efficiency and waste reduction programme across all our sites.

The gas conundrum

So what about gas? There remains much uncertainty about the direction of travel, not so much for new build developments, but for the many millions more homes in our legacy housing stock. The smart money is on the introduction of an 80/20 blend of natural gas and hydrogen for heat, which can already be transported through our modern pipe infrastructure and work with most existing boilers.

This would provide a pragmatic solution for most households while simultaneously delivering a significant reduction in total carbon footprint, though of course this would require significant investment in blue or green hydrogen generation. At the same time, district heating schemes are on an upward curve and looked upon favourably by government, with Ofgem due to take over regulation of this sector in 2023.

Total hydrogen systems are likely to be limited, for now at least, to intensive energy users in industry, and also as a source for zero emissions heavy duty trucks, construction plant, and works vehicles.

What does the future look like?

In short, if we look beyond the immediate cost issues for energy, there’s some cause to be optimistic. Our energy infrastructure mix will become much more diverse, tariffs more flexible, supply more decentralised and providers more multi-utility. For homeowners and industrial and commercial users, it’s difficult to see any positives beyond cost issues, but from an energy security perspective, today’s crisis looks set to spawn greater resilience over the longer term.

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