The last year has been full of unique challenges for the energy sector, in particular the strain of skyrocketing energy prices.
With COP26 having been hosted in Glasgow in November, greater attention has been increasingly drawn to the role of clean energy and technology in the transition to net zero. The transition to greener energy sources has undoubtedly continued throughout the last year, while further progress has been made in the rollout of key technologies even as the sector continued to contend with the impact of COVID-19.
But the year has also lead to an unprecedented number of supplier collapses, and concern over the cost passed on to consumers as gas prices remain at record highs.
At the end of 2020, we asked the energy sector’s own soothsayers about their predictions for the coming year. Here, we take a look back to see who was on the money.
Price volatility
While pricing volatility in the market has been extreme, it wasn’t completely out of the blue. Indeed, a number of industry experts last year predicted it to a certain extent, including Andy Hadland, chief product officer at Arenko, who suggested that it would lead to an “increasing and sharper focus on automated trading strategies”.
Certainly, with the volatility leading to record high power prices in the Balancing Mechanism, we have seen a shift in the management of strategic assets such as battery storage.
This was seen early on in 2021, with prices hitting a then record breaking high of £4,000/MWh on Friday 8 January. As the year continued, spikes have happened repeatedly and soared to similar levels again in September.
“We’re going to see prolonged system price highs, prolonged wholesale price highs, more days with negative price periods and longer negative price duration periods,” Ed Porter, business development director, Invinity Energy Systems divined last year.
This has rung true, with gas prices growing over 250% between January and September pushing up wholesale prices. While some have capitlised from these highs, the combination of the wholesale power price and Ofgem’s price cap has lead to 28 supplier failures in 2021, with more expected.
Probably the closest to the mark in this regard was Doug Stewart, managing director of Green Energy UK, who last year told Current± that: “Energy spiking will cause problems within the balancing market and those suppliers who are already stretched by a lack of profitability, a deferment of distribution charges, and the advancing of credit to those finding it difficult to meet their winter bills, will feel a pinch in their cash. Depending on the Capital Markets’ appetite for risk investments in utilities, the outcome could be managed, or disastrous.”
EV’s ‘charging ahead’
One prediction that has won out this year is the continued growth of EVs and EV infrastructure in the UK.
Last year, James McKemey, head of Insights, Pod Point suggested that sales of full battery electric vehicles (BEVs) would be >10% of the market in 2021.
The registration of EVs has certainly been strong throughout 2021, with sales in September representing 15.2% of the market share – beating diesel vehicles for the fourth month in a row for example. According to SMMT, across 2021 plug-in vehicles now account for 16.6% of all new car registrations.
A key part of this growth, as David Savage, regional manager of Geotab, UK & Ireland pointed to was the growth in fleet vehicle electrification. In 2021, we’ve seen the likes of BP, BT, Direct Line Group, Royal Mail, ScottishPower, Severn Trent and Tesco all committ to EVs.
Following on from this, Ian Johnston, CEO of Osprey Charging said that the charging landscape will be “transformed” in 2021. Similarly this has rung true, with the UK passing the 5,000 rapid EV charger milestone in November, as chargepoint are becoming increasingly commonplace at shops, petrol stations and on the street, as well as in people’s homes.
Smart meter rollout opens up new technological options
The rollout of smart meters across the UK was particularly impacted in 2020 by the COVID-19 pandemic and subsequent lockdowns. Throughout 2021, it has again picked up pace, as Simon Egan, managing director UK, Ireland and Netherlands at Landis+Gyr predicted last December.
This was a prediction also made by Marzia Zafar, head of strategy and policy, Kaluza, adding that “far from plunging customers into darkness, smart meters will enable a brighter energy future”.
There has been a number of smart meter-driven trials around the country that have been taking advantage of the technology to increase flexibility and security of the network. For example, Northern Powergrid recently unveiled a voltage control project designed to increase network efficiency that relies of smart meter data.
Shift to low carbon heating
While the need to decarbonise Britain’s heating systems have arguably moved up the priorities list in 2021, progress has been stilted. This was hampered early in the year by the closure of the Green Homes Grant, which the Public Accounts Committee today called a “slam dunk fail”.
In last year’s Current± Predicts series, a number of industry experts touched on the need for shift towards low carbon heat solutions.
Kate Weinberg, director of sustainability, OVO pointed to the importance of the Heat and Buildings Strategy, which was released October and placed heat pumps at the centre of its plans. The energy sector broadly welcomed the Strategy, although concern remains over whether decarbonising of heat is going far enough, fast enough.
The Current± Predicts series will return for 2022, with a host of energy experts already lined-up to take part. Want to put your crystal ball to the test? Get in touch with [email protected] to find out about how to take part
