At the end of last year, we asked a host of energy experts to predict what would happen in the energy market in 2019. Today we revisit those predictions and crown our Current± energy clairvoyant.
As 2018 drew to a close, Current± asked a host of energy experts to gaze into their crystal balls and predict what the energy market may see in 2019. Now the time has come to revisit those predictions, see how prophetic those experts were and crown our Current± Clairvoyant for 2019.
The EV market will grow strongly
Many of those who contributed predictions last year – perhaps unsurprisingly – expected there to be a major uptick in the adoption of electric vehicles throughout the course of 2019. Open Energi’s David Hill, the Energy Networks Association’s Randolph Brazier and Energy UK chief Lawrence Slade all expected there to be major growth in the UK’s EV market.
And they were, to some extent, absolutely correct. Figures released by the Society of Motor Manufacturers and Traders in July revealed a 61% jump in battery electric vehicle sales, and that performance continued to climb throughout the rest of year. In October, alternatively fuelled vehicle sales accounted for nearly 10% of all new car sales in the UK, a record share for the sector.
There is undeniably some way to go before a significant chunk of the UK’s car fleet is electric, but it is equally undeniable that the EV market has grown strongly in 2019.
The rise of tech-supplier partnerships and interdisciplinary operators
Lines between the energy and technology sectors continued to blur throughout 2019, and this is another topic a number of our predictors expected would happen over the course of the last 12 months.
Open Energi’s Hill showed some excellent foresight in his prediction that technology-supplier partnerships would surge in 2019, substantiated by OVO Group company Kaluza’s deals with the likes of sonnen and Powervault.
Speaking of OVO, Mitsubishi’s acquisition of a 25% stake in the energy company did – at least partly – realise one of my own predictions that a major tech or IT company would enter the UK energy retail market this year. Mitsubishi’s follow-up acquisition of Eneco last month would make the former deal appear as part of a more significant aim at capturing energy customers in Europe.
This could also build on a prediction from Electron’s Jo-jo Hubbard last year, who expected there to be a rise of interdisciplinary operators, possessing many more feathers to an increasingly large number of bows. OVO is just one example of this, with EDF targeting the EV space and home energy connectivity amidst its utility capacity and Centrica doing something distinctly similar.
Market volatility, storage and flexibility
Amongst the most interesting and fast-paced trends to witness throughout 2019 has been the rise of flexibility as the most valuable trait in energy markets. Coal’s collapse and the rise of renewables has led to periods of volatility on various energy markets and negative pricing in prolonged instances. This weekend was the perfect example of that, with negative pricing for 14 straight hours in the UK imbalance market.
Ed Porter of energy storage firm redT saw this coming a year ago, forecasting that volatility in energy markets would drive energy storage forward. Pricing volatility is just one factor, and indeed those with battery storage assets have been making hay while the sun has shone and the wind blown so far, but battery storage really came into its own during August’s blackout. The ENA’s Randolph Brazier also correctly expected there to be a boost for energy flexibility in the year to date, and the energy networks the ENA represents have been quick to launch new markets in an attempt to procure greater quantities of flexibility.
The rise of these flexibility markets and other revenue streams for battery storage assets has led to a more curious circumstance for the Capacity Market. Once the storage market’s golden egg, prices are now so low that it is of increasingly little interest. Fluence’s Marek Kubik expected the scheme’s suspension towards the end of last year to have comparative little impact on storage’s rise, and that would certainly appear to have rung true.
Speaking of the CM, its swift resolution – the European Commission’s investigation was concluded in no time and auctions will now take place across Q1 2020 – provides another tick in Lawrence Slade’s column, after the departing Energy UK chief suggested such an outcome would be hoped for this year.
The best (and worst) of the rest
Predictions we compiled also proved accurate elsewhere. Open Energi’s David Hill said he expected demand-side response to “grow up” in 2019, and given the asset class’ rising pre-qualification rates in the T-1, T-3 and T-4 CM auctions, that could well be the case. We await the outcome of those aforementioned auctions.
Jo-jo Hubbard was, too, spot-on with her assumption that the energy market would see more prominence given towards digital infrastructure over physical infrastructure. National Grid ESO has turned increasingly to its suite of digital balancing tools to manage the UK’s power system.
Lawrence Slade’s expectation that Ofgem’s price cap and increasing competition would bite the supply market hard was also extremely prescient, given continued troubles at npower, Centrica’s decision to replace CEO Iain Conn and yet more retailer collapses.
But our predictors weren’t always on the money. Porter’s expectation that the policy rollercoaster will continue was derailed by a Brexit impasse that has continued to delay legislation critical for the energy transition. Danielle Lane of Vattenfall’s prediction that the district heating sector would take off was perhaps a year or two too early, as was my prediction that subsidy-free utility-scale developments would “take off” in 2019.
Current± Predicts Champion of 2019
Lawrence Slade, with a near perfect score of three (and a half – we haven’t had a hard, IEM-hitting Brexit just yet) out of four. Energy UK’s loss is clairvoyance’s gain.
The Current± Predicts series will return for 2020, with a host of energy experts already lined-up to take part. Want to put your crystal ball to the test? Email three predictions with some context to firstname.lastname@example.org.