Innovations In the UK’s Energy Market

• Redefining the Top Down Model

The way households and businesses use electricity, and the way it is generated, transported and traded, is currently changing rapidly in the UK market. The United Kingdom is taking major steps in decarbonising the country’s economy and the way our national electricity is generated, stored, transported and traded. 

There are business strategies to redefine the national grid’s top down one-way energy flow model. This is the model where electricity travels from the generation power plants, to the national transmission systems, to the local distribution system, then eventually to buildings such as our homes and businesses.  

Fig 1, The Traditional Top Down One-way Energy Flow Model 

The traditional electricity distribution model is built around the one-way flow of energy to the consumer. Due to technology improvements and the increase in local renewable energy production, the plan is to remodel the top down paradigm into an active decentralised model where energy flows in multiple directions. 

Fig 2, The redefined Energy Flow Model with the new market segments

• Challenges and Opportunities

As solar panels and battery storage technology become ever more affordable, the Smart Export Guarantee (SEG) will allow the average energy consumer to generate, store and trade electricity back to the national grid. 

SEG is a government-backed initiative first launched in 1 January 2020. SEG requires some electricity suppliers, known as SEG Licensees, to pay small-scale generators, known as SEG Generators, for low-carbon electricity which they export back to the National Grid, providing certain criteria are met. 

The initiative is for anyone with an installation of one of a renewable energy technology up to a capacity of 5MW, or up to 50kW for micro-CHP. Installations must be located in Great Britain and meet the applicable eligibility criteria.

At present local community energy organisations can generate and store electricity via means of renewable energy sources. However, renewable energy sources, such as solar and wind can be unpredictable, as they are subject to the vagaries of the weather conditions. Hence, these local energy communities will stay require grid electricity top-up supply or large scale battery storage.

Fig 3, The Pillswood battery storage system in East Yorkshire, UK. Harmony Energy

Projects like the Pillswood Battery storage facility in East Yorkshire can assist with this. It can store enough energy to power around 300,000 homes for two hours. The system will play a major role in the net-zero transition, ensuring the future security of the UK’s energy supply. 

In addition to the major shifts in electrifying the transportation and building services, the roll out of electric vehicles and heat pumps will lead to an electricity demand expansion can place the regional power networks under electricity strains.  

Energy Operators, Energy Aggregators, and likewise Energy Consultants are merging together to meet this transition and to work with potential clients to understand the benefits of these opportunities. Overall, such a huge transition in the energy sector will translate into further challenges and opportunities to the energy market segments.

• Being flexible is part of the solution 

Energy intelligence is about when and how to use energy. As part of ‘levelling up’ with market changes, energy producers and consumers are observing new prospects for how to be flexible when and how to use energy. Achieving this will help make the most of the existing electricity network, mitigate increases in energy prices and lastly avoid expensive network reinforcement budgets. 

On the commercial side of things, some large businesses across the country’s energy market have adopted Demand Side Response (DSR) agreements to flex their demand in exchange for payments. DSRs encourage large commercial entities to have on-site energy storage facilities to manage shifting their demand according to the energy prices fluctuations over a high usage period. It’s expected that these commercial DSR agreements will become more popular in the future and help balance the UK’s Electricity Network. 

Not only commercial consumers can make benefits of DSR agreements, domestic consumers can also participate. By means of smart energy meters and smart appliances, home owners will have the opportunity to take advantages of the savings through flexible services and flexible contracts.

Zero Bills is a smart energy initiative adopted by Octopus Energy. It is marketed as ‘a world-first smart proposition that allows customers to move into homes that have no energy bills for at least five years, guaranteed’. The claim is that Zero Bills households will save around £1,800 on energy bills compared with those on a standard variable tariff, based on current energy rates. At present the scheme is set up for new homes. 

Octopus Energy have also proposed the ‘Intelligent Energy Demand Approach’ to move demand to the times of the day when electricity is cheapest and plentiful, and out of the most polluting times, when electricity is expensive. ‘Intelligent Octopus’ can optimise an electric car charging by looking at the electricity prices over the next 24 hours, the time the car is need to be ready by, and taking into account the state of other essential components of the power network.

• What is in the Energy Horizon 

As renewable energy production grows, new markets will emerge, and the built environment policy and regulatory landscape will also evolve. The Government and policy makers have acknowledged that the regulatory framework needs to adapt, especially in areas such as energy production and storage. Nevertheless, the way that new markets are allowed to develop, and the degree of central control that should be imposed, is currently another area of active debate. 

At Envision, we specialise in navigating these evolving regulatory frameworks and emerging markets, providing strategic guidance and innovative solutions in building energy consumption and compliance. Our expertise ensures that your projects remain compliant and ahead of industry changes. 

Thanks, 

Yahia Kheder