npower Business Solutions’ Head of Flexibility Services Ben Spry explains why taking a look back can help us plan our Net Zero future
2020 is proving to be a landmark year for energy.
While it’s a time we will remember for many reasons – with Covid-19 resulting in shifting demand, an unprecedented coal-free spell and record low energy prices – it is also an opportunity to reflect and refocus.
A chance to take stock of the elements that have come together to shape our nation’s energy transition so far, and to imagine the possibilities that lie ahead in a cleaner, greener Net Zero future.
With our industry now so focused on 2050 and the possible scenarios that could help the UK achieve its decarbonisation goals, we thought it would be interesting to revisit the predictions we made for 2020, back in 2011.
Decarbonisation a long-term trend
When we created the Future Report 2011, in partnership with The Grantham Research Institute at the London School of Economics, investment for decarbonisation was already on the agenda and statutory greenhouse gas reduction targets had been set – 34% by 2020 (compared with 1990 levels), 50% by 2027 and 80% by 2050.
This trend towards decarbonisation also came at a time when an abundant (although finite) and low-cost energy source had also appeared on the scene: shale gas.
Back then, it looked likely that the cost of renewables might prove too prohibitive, and that shale gas would play a major part in our energy future out to 2020.
It was against this backdrop that our four future energy scenarios were devised, and revisiting the 2011 report has been fascinating.
The influence of surprise developments
It’s allowed us to see that, while many of our predictions were broadly correct, no one scenario is a precise depiction of how the marketplace has actually evolved.
This is because there have been advancements in, and a reduction in costs, of renewable technologies such as offshore wind and solar PV.
What’s more, new pressures and political actions have taken the industry by surprise. And marketplace disruptors have emerged that couldn’t possibly have been predicted – for example, Brexit and Covid-19.
Three valuable lessons
Our look back hasn’t just been interesting; it’s also taught us some very valuable lessons:
- We can never predict everything
When the Future Report 2011 was created, the energy industry was in the midst of a demanding and uncertain era.
However, we didn’t know that the resilience we started building then, following the financial crash of 2008/9, would serve us so well when 2020 finally arrived. And, while many of the questions we raised a decade ago have now been answered, new challenges have emerged.
There are some things that we know we don’t know yet – like the best way to effectively decarbonise heat, what our nation’s participation in the EU’s Emissions Trading Scheme (ETS) will look like, and how societal changes caused by the corona-virus pandemic will shape energy consumption in the longer term.
However, it’s clear there will always be issues, events or advancements that evade prediction; things that will only seem obvious with hindsight.
That’s why building greater resilience and being flexible enough to adapt are now more important than ever.
- We need to stay focused on Net Zero
With uncertainty the most consistent feature of our social, political and economic landscape over the past decade, it’s more important than ever to stay focused on key goals. And in the energy sector, the primary goal now is facilitating Net Zero.
Many argue that a post-Covid recovery plan that has Net Zero at its heart will give us the best chance of securing long-term economic and environmental stability, whatever else the future throws at us.
For example, according to a new report from the WWF, the Net Zero path could deliver around £90bn in annual benefits, pushing the UK towards its 2050 target while boosting job prospects, contributing to the economy and improving public health.
What’s clear is that energy – and how it’s procured and managed by businesses – will be central to achieving this.
- Businesses have a vital role to play
For this vision of a better energy future to become a reality, large industrial and corporate businesses will be required to play a key role.
We recognised the importance of their role back in 2011, as well as our own responsibility to support them – and both remain crucial today. But what actions should businesses be taking?
One of the messages from the Future Report 2011 that still rings true today advises: ‘The key is to understand and manage energy well’.
For businesses in 2020, this will mean going further than energy efficiency and demand side response. It will mean setting ambitious internal decarbonisation goals and taking corporate social responsibility seriously.
Energy strategy must become an integrated part of broader business strategies – influencing business culture and transforming operations right across the supply chain.
Resources designed to help
At npower Business Solutions, we work with customers across a wide range of sectors to help them plan their long-term energy strategies.
One of the first steps is to secure buy-in at board level, and our new presentation template ‘Making the business case for a long term energy strategy’ can help to pave the way.
If you would like to read what our guest energy experts had to say about the predictions we made back in 2011 – or what they think will now happen in the short, medium and longer term – you can download the 'Future Report 2020' here.
With contributions from the author of the original report, Professor Sam Fankauser – plus Arjan Geveke from the Department of Business, Energy and Industrial Strategy (BEIS) and Robert Buckley from Cornwall Insight, as well as a business energy user view from Simon Bennett at ADM Milling – it provides businesses with useful insights and advice on building an energy strategy that’s future-fit.