2020 predictions: UKs clean, decentralized, flexible power market

In the past 12 months, we have seen many noteworthy developments made in the climate and clean energy field in the UK. We saw many ambitious targets and deadlines set to achieve ‘net zero’ in the coming years. We also saw large additions to the renewable energy fleet, extended multi-day zero coal generation operation and >50% clean energy moments in the grid, along with the small but significant growth of EVs. 

With several momentous developments in the climate and clean energy domain in UK in 2019, there is a clear onward march towards a renewable and decentralised electrical power system. 

Here are our predictions for what lies ahead in 2020:

Finance & Investment

The New Year should see the continued flow of greater investment finance into clean energy assets and other clean tech with a manifestation in the onward rise of renewable energy and associated operational, market and system integration solutions. The economics facts on fossil fuels and fossil fired electricity generation, adding to a growing aversion to long-term carbon exposure and reputational hazards, will continue to divert investment dollars towards clean energy sources. Commercial & Industrial organisations will invest to reduce exposure to higher carbon intensive energy costs and reap benefits from the growing opportunities from clean, smart, flexible energy options. Policy and regulatory stability and forward looking measures will create some further confidence in such investment. 

Science and Policy

We expect more clarity of communication of climate science including accounts of the observed and experienced impacts of climate change (e.g. extreme weather, ice cap/glacial melting, biodiversity and agriculture attrition). There are likely to be many more climate emergency declarations, 100% renewables policies enacted, more ‘net zero target’ setting and a rolling forward of timelines to reflect the urgency.  In 2020 Glasgow (Smarter Grid Solutions HQ) hosts COP26 and we expect more coherent policy announcements and heightened urgency for implementation.

New Players & Entrants

We expect to see a greater prominence for new, emerging and growing participants in electricity supply chains as well as direct market participants including EV provision, EV charging, energy storage, behind the meter aggregation, flexibility service providers, hybrid energy solutions and heating and cooling (service) solutions. This will start to have a profound effect on the nature of clean, decentralized energy systems and on the wider system.  Aggregations of EVs and smart inverter connected PV systems will cement the place of technology providers in the operation of the system.  The growing impact of the information technology and data companies on customers, system operation and markets will continue.

Regulation

Regulators will respond to the climate science, policy, investment, customer demand and changes in the energy system through new market and system measures that tilt the sector towards clean energy.  In the networks, we expect that investment plans will increasingly reflect decentralised, clean energy integration and enhanced customer participation with value attached for those that can flex to support a more dynamic system. 

Means to monetise the value of customer participation, self-production and flexibility are likely to be ongoing trends, balanced by the need for fair contribution to grid infrastructure. Regulators will reflect the technical advances in energy and network technologies, system changes and opportunities, all while incentivizing utility business model changes and the adoption of competitive, non-wires solutions to network infrastructure challenges.

The Coming Decade

We can now see many of the effects of the last decade of innovation, policy, regulation and investment in the clean energy transition. At the same time, these changes are only the starting point for the complete decarbonisation of energy with the accompanying creation of a smarter, more flexible and more decentralized, customer focused energy system. The coming decade will see massive changes in the structure and experience of clean energy with a major shift from a select few markets to all corners of the world.

Graham Ault, Exec Director at SGS