Former Npower boss Paul Massara: Business community will lead UK’s energy transition
Amid sluggish policy changes and falling technology and renewables costs, the UK's business community is likely to lead the transition to a low-carbon, decentralised and democratised energy system, Npower's former chief executive Paul Massara has suggested.
Speaking at the launch of a report revealing that wind and solar power could meet around 50% of the UK’s electricity demands by 2030, Massara agreed with the All Party Parliamentary Group for Rural Business’ chairman James Heappey MP, who called for an end to the “myth that renewables and cleantech only happen when Government writes big cheques”.
“The cost of balancing the system has moved up from £564m five years ago to £1.3bn today, and is forecast to be £2.8bn by 2030,” Massara, now chief executive of Electron, said.
“At the same time, the forward curve has started to come down, meaning you’ve got more and more low-carbon plants running at zero marginal cost.
“This creates a massive incentive for businesses and individuals to start creating their own flexibility. What we need to do is tap into the flexibility which already exists in companies around the country in cars, storage and water heaters. We also need to allow them to tap in and get paid for putting flexibility back into the system.”
For this transformation to come to fruition, Massara argued that the so-called Big Six energy firms would need to change their “mental model” and make full use of existing demand response opportunities – even though doing so would reduce the energy consumption of their customers.
“As technology comes in and as renewable prices come down, we’ve got to empower businesses, individuals and communities to adopt new energy technologies and become more self-sufficient by enabling them to get paid for the flexibility they account for,” Massara concluded.
Heappey agreed with Massara, noting that several large businesses have moved to offer domestic services and products enabling onsite generation and storage in recent times – including Google and Nissan.
“Even the smallest businesses in my constituency have long since put solar panels on the roof,” Heappey, who represents Wells in Somerset, added. “They’re now looking at batteries and switching their delivery fleet to electric vehicles (EVs) – their ability to balance their own needs behind-the-meter is already proven.”
Consultancy New Resource Partners’ director Hugo Chandler, meanwhile, argued that the perceived difference between policy and business leadership is “not binary” and that action from all sides is likely.
“You might see peer-to-peer or business-to-business energy trading services through blockchain emerge within a village, but at the same time, see that local energy being traded nationally,” Chandler explained.
“Government just needs to remove the historical barriers – which have been built for good reasons to help build an energy system around large, centralised plants – and allow the energy landscape to revert to its more natural, decentralised state.”
His sentiments were echoed by the University of Exeter’s professor of energy policy, Catherine Mitchell, who urged policymakers to alter current “pitiful” incentives for utilities to decarbonise.
“Policymakers need to start thinking about regulating for this 21st-century energy system, but they’re still viewing it in the same way – as a few big companies that have top-down delivery to customers,” Mitchell said.
“Historically, the guys at the top have said the right things, but what has happened on the ground has been a step back. If we take a step back now, we stand absolutely no chance of meeting our carbon targets related to 2C.”
Specifically, Mitchell argued that large utilities were unlikely to invest in low-carbon technologies and smart energy systems because they feared being left with stranded assets.
Her comments came shortly after the publication of a CDP report revealing that oil and gas firms are failing to prepare for the low-carbon transition.
New energy futures
A further key discussion point for the speakers was how businesses would continue to adapt to what former National Grid Boss Steve Holliday has described as a “chaotic energy revolution”.
Panellists concluded that large corporate energy users who have historically been paying a lot of their energy would soon be able to offer services, placing the onus on them to install technologies and enabling them to “tap into” their flexibility potential.
“I get very excited that, in 20 years’ time, companies are going to find themselves in the peaking business,” Heappey said.
“If you’ve got 200 cars parked outside of your facility in the post-work surge on the energy system, what’s to stop you giving everybody loyalty card points or a discount for accessing their EV and contributing to the flexibility market?
“I think that Ofgem has a real shock coming when some of these massive companies start realising the opportunity to leverage forecourt flexibility and the Internet of Things (IoT) to play with the utility market.”
This week, edie is publishing a series of summary reports developed from SPARK! – an exclusive event held for energy managers which explored the challenges and opportunities facing Britain’s business energy revolution.
Covering topics from behaviour change to big data, the reports are available to download here.