The energy landscape in the UK is undergoing an enormous shift as it strives to decarbonise.
But what's really driving how the industry is being reshaped? A common way to break this down is the four Ds - a term often heard across the energy sector and in different environments when talking about energy transformation. These are the four areas at a macro level driving change, disruption, and investment in energy systems.
The push towards a zero-carbon energy system is one of the most significant drivers of change. This involves transitioning to a zero-carbon grid and helping customers reduce their CO2 emissions from energy consumption and generation.
Modernising the energy system through digitalisation is crucial. Many energy industry participants still rely on outdated methods, including paper-based processes. Digitalisation is a fundamental enabler for the future management and operation of the UK energy system to support the increased demand, complexity and mix of generation and demand assets. Central to digitalisation is automation using data, AI, and machine learning to create a more efficient and intelligent energy system.
Empowering consumers to have more control and options in their energy consumption is another key factor. Whether domestic or business consumers, the goal is to provide them with choices about how, where, and when they use energy.
Decentralisation is transforming the traditional large-scale, one-way energy system into smaller, more agile parts. This includes individuals generating their own energy through solar panels and home automation systems, as well as smaller participants taking on roles traditionally held by large power stations.
If the four Ds describe the shift at a macro level, there are a number of areas we can look at in real terms where demand for energy is rising significantly. If the four themes above require a more agile energy system powered by low-carbon electricity, the below areas show how it will also have to meet rising demand.
Electricity demand in the UK is expected to double by 2050, necessitating a significant expansion of the current network and generation capacity. This means not only replacing existing infrastructure but also doubling its size to meet future needs - all while balancing priorities of net zero.
The transition to electric vehicles is accelerating, with the UK planning to ban new sales of internal combustion engine cars by 2035. This shift requires substantial investment in electric charging infrastructure and an increase in grid capacity to support widespread EV adoption.
The UK's renewable energy footprint is projected to grow to 70% by 2035, necessitating a fourfold increase in offshore wind capacity. This involves not only building new wind farms but also integrating this renewable energy into the mainland grid efficiently.
The number of interactions within the energy system is set to increase exponentially. This includes more small-scale energy generation, such as farmers installing solar panels and households using large-scale solar systems. Managing these interactions will require a highly intelligent and automated energy system.
The current energy system is largely one-way, where energy flows from generation sites through transmission and distribution networks to consumers, sold to them by retailers.
The future energy system will be more dynamic and two-way. Consumers, or "prosumers", will generate, store, and feed excess energy back into the grid. This system will require advanced prediction and management of both supply and demand, focusing on efficiency and responsiveness.
All of this requires a mindset shift, thinking instead of how to be more energy efficient and match the demand to supply, especially at peak times, rather than the other way around. So, where we may have uncertainty in our supply, we have to try to manage the demand to the level of generation or supply that we have, instead of managing supply to the amount of demand that we have.
If these are the macro level challenges, with the targets that need to be met and the shift in mindset, there are also three major priorities for actors within the energy system: operating with flexibility, capable of handling complexity, and transitioning to net zero.
Flexibility in energy consumption is essential to smooth demand curves and avoid network constraints.
Our networks don't have the capacity to fulfil that increasing demand for electricity. So at certain times of the day, they will see constraints on those networks. How can the system incentivize customers to time shift that demand, thereby allowing us to smooth that curve and remove those constraints?
There is another set of challenges around generation. In the world of having more renewables and unpredictable generation from wind and solar, how do we smooth that curve so that we can balance supply and demand? So rather than turn up and down supply, how can we turn up and down demand at the customer side of the cable to avoid any of those constraints or reductions in the amount we can generate energy for.
As part of this flexibility, the energy industry vast swathe of participants need to share and collaborate better. The industry comprises various key actors, including retailers, network operators, and the National Energy System Operator.
Supporting organisations, such as the Department of Energy Security and Ofgem, play crucial roles in regulation and policy setting. The transition to a more digital and decentralised energy system will require collaboration among all these actors.
The increase in decentralisation and the number of energy system participants adds complexity. With more actors there is a growing reliance on our assets, ensuring their health and what fixes are needed before they break and we have to take assets out of operation. As demands on the grid rise with more reliance on energy and electricity to power our homes and our vehicles, having a reliable network of assets is integral.
A decarbonised society requires a grid capable of moving energy in different ways. Traditionally energy went from the generator to the consumer, but a decarbonised grid needs to be bi-diretional, capable of supporting consumers contributing energy to the grid as well as consuming it.
To add another layer of complexity, there are key challenges around forecasting and predicting energy needs accurately, integrating infrastructure efficiently, securing sufficient investment and human capital, and managing the variability of renewable energy sources. Balancing cost, carbon reduction, and energy resilience is essential to meeting these challenges.
Having robust data and market intelligence to power real-time decisions is essential to overcoming these.
Achieving net zero involves removing CO2 from the entire energy system, from generation to consumption. In the face of rapidly increasing demand, how can the energy system turn off coal and gas power stations in favour of low-carbon generation? How can any new generation be connected to the grid?
Part of the net zero transition is helping consumers adopt energy-efficient devices. For homes to have heat pumps, solar panels and battery storage. But how is this facilitated? Who pays for it and what’s the return? Why should customers adopt these low-carbon technologies?
These are all questions leaders will need to answer in the short-term if the energy system is going to meet these goals. Data’s role will be integral in informing these decisions and that means sharing quality data across the system and greater collaboration.
Within all of these key drivers and priorities for the energy system, the availability of quality data is a commonality. Energy and utilities enterprises need improved accessibility to the right data to drive decision making across operations if they’re to meet the three pronged goals of resilience, affordability and sustainability.
We’re at the forefront of reimagining how energy firms approach data and harness it within their own transformation journeys. We’ve worked with some of the industry’s biggest players, such as National Grid and EDF and our track record speaks for itself.
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