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UK Energy Market Disruption

Who would know that we live in a time of great change within the UK energy marketplace. Complicated and bewildering beyond belief, a marketplace which few understand or see the dangers faced.

The upsurge of irresistible incentives such as Feed in Tariffs, Renewable Heat Incentives, Renewable Obligation Certificates, Contracts for Difference, and some of the latest income streams such as Fast Frequency Response and Grid Balancing have tempted many to jump in feet first into this whirlpool, whilst others stand on the side lines.

This new era is not of course without its own new set of problems, often just more difficult to determine. The much reported intermittency of renewables and the unprecedented rise in the demand for energy in general, places a massive strain on an already heavily burdened National Power Network Infrastructure.

There has never been a greater need for MD’s and FD’s to grasp and understand the implications these challenges will have on an individual business.

Drill down into the detail and demand more of your advisors.

 

Threats – Lack of transparency

UK Companies are only just beginning to feel the effects of a massive shake up in the power market back in April 2018. A change that dramatically altered the way in which power contracts are charged for, hidden in pages and pages of small print.

This has been an unashamed effort by the power companies to claw back monies and profits lost to them, by the shrewd efficiency efforts of UK business to mitigate standing charges applied in the form of DuOs and TRIAD’s.

So well done you, this was however never going to be sustainable from the power company suppliers perspective, given the vast sums of money that are going to be needed both to reinforce and expand the power networks to meet future demand.

Capacity

Available electrical capacity in many industrial areas remains one of the largest challenges being addressed by the power companies and their ability to supply the power we need to do business.

The oversupply of power with all these new energy sources has created network power bottlenecks,

frustrating both generators and end users alike.

Although Electric vehicles are still pretty much in their infancy, the demand and burden that they alone will ultimately create, will have to be shouldered by the end user in increased power costs.

It is not beyond reason to suppose that we will see a greater instance of both overvoltage and under voltage across the network as the power companies struggle to maintain a regulatory power balance in the next five years with Electric Vehicles alone.

Future Access

The enormity of creating the required additional capacity cannot be understated. OFGEM the power regulator has for some time now been looking at ways of reforming power access and charging arrangements in an attempt to make a better use of the existing system.

Without a doubt these new proposed charging arrangements, whether they be time profiled access rights or a capacity based charging approach remains to be seen. Clearly from both a manufacturing and financial perspective, having a better understanding of what the future might hold, will be a matter of common-sense and self preservation .

Opportunities

Looking into your energy future is a little pointless if you don’t take time out now to clearly establish where you currently stand in the energy universe.

Spending time and money creating elaborate strategies, carbon footprint reduction and energy efficiencies programmes, is a game lost before you even start, if a comprehensive data analysis is not carried out in the first place. This will allow you to establish a benchmark by which to verify future efficiency efforts and strategies.

Conclusions

Apathy – The distractions will be a whole host of future incentives which the Government will bribe us with and a sense in management of this is just how things are.

This is in fact not the case, be more aware of the clear and present dangers that the loss of current capacity , local network constraints and overreaching demand capacity will have on any future business growth plans. Managing energy data analysis will be a key indicator in your future ability to act smart and dodge the bullet.

Take Sensible Steps

Appoint a responsible officer to manage energy and sustainability within your company. Commission Utility data analysis, keep an eagle eye on billing for those creeping charges, re-visit existing ESOS reports create an efficiency priority list, carry out internal voltage investigation to determine under and over voltage (a simple test), mitigate and replace ageing transformer assets, review manufacturing process, sub-metre production lines, invest in appropriate embedded power generation and power storage. Create an internal or join a local energy forum to share ideas.

 

 

Good Luck fellow disruptors.

 

 

 

 

 

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