Managing energy in times uncertain – how to plan in an unpredictable climate

Michael Byrne, head of marketing and insight, npower Business Solutions

Without doubt, 2020 has been challenging for almost every business. The closure of many industries for a prolonged period during the Spring, a second ‘lockdown’ in November and the ongoing tightening of restrictions, will continue to have a profound impact on how we do business.  Even those industries that have been permitted to continue, such as construction and manufacturing, will have seen a significant change to how their premises are managed.  For sectors such as retail and hospitality, the requirement to close with very little notice makes effective planning even more difficult.

For energy managers, the regular changes to workplace rules and regulations present their own challenges – from having to quickly switch to managing the energy consumption of buildings during times of low (or no) occupancy to knowing how much energy to purchase.

So, what actions can energy managers take to ensure they can manage energy demand,  keep sustainability front of mind, while also ensuring their properties are running efficiently? .

For us, there are five practical steps to take in the short, medium and longer term.:

  1. Plan for future disruptions For many businesses, the closure or reduced activity at some sites resulted – and continues to result – in a change in demand for energy.  The first lockdown in March and April hit demand hard – figures from National Grid showed that demand for power fell by as much as 20%, dropping sharply in March and reaching its lowest around the Easter weekend (11/12 April).  
    While demand slowly started to creep up to pre-Covid levels as restrictions were eased, the stricter restrictions introduced during the Autumn are likely to have had an impact, albeit not as profound as in March.
    For any significant change in usage, businesses may be able to reduce what they thought they were going to have to buy or potentially sell back volume that will not now be used.
    The key thing is to not panic.  For example, although the pandemic had an impact on short-term energy prices, the long-term PPA that looked like a good deal pre-Covid-19 may still be a good deal in the longer term.  Over the next six months, it is important to work with your supply partner to look at the longer-term implications of fluctuating energy consumption and prices, and how to best mitigate any risk – or assess any opportunity..
  2. Make the most of the (final?) Triad season The 2020/21 Triad season started on 1 November and, as with many things this year, it is difficult to predict when the three half hours of peak demand will fall over the coming winter season.
    The ability of an expert team of Triad-forecasting specialists to successfully read and predict demand is going to be more crucial than ever this season, as with so much uncertainty and unpredictability around, we are not expecting the usual factors to apply in the same way as previous years.
    Despite so much uncertainty, the one sure thing is that reducing consumption during potential Triad periods is likely to save large businesses significant sums of money.
    National Grid bases its Transmission Network Use of System (TNUoS) charges on consumption during these three half hours of peak demand, which are only calculated after the end of the winter season. With charges as high as £59,267[1] for every megawatt consumed during a Triad period, any reduction can result in significant savings.
    Load shifting or switching to on-site generation are the most common ways to Triad manage. An expert partner can help to automate this process and advise on the best way to manage your business’s energy use during suspected Triad and other peak-charging periods.
  3. Maintain a focus on net zero by taking control of cost and carbon
    While predicting demand is challenging, energy managers should focus on the areas that they can control. Energy efficiency has been called a ‘no regrets’ action and can include relatively ‘quick wins’ such as switching to more efficient lighting, air conditioning and refrigeration, as well as bigger investments such as implementing a smart energy management system.
    The key to making sure you are making the right decision on where to invest is by ensuring you have a thorough understanding of your data – how and where energy is being used, the efficiency of infrastructure and processes, and how employee behaviour impacts emissions.  An energy audit can help spot risks and identify improvements.
    Using real-time data collection and analysis can enable energy managers to spot and correct areas of waste, by seeing if lights or equipment have been left on, or if the settings on the Building Management System are not optimal.  The increased visibility also makes it possible to assess the effectiveness of each new energy efficiency measure implemented. 
    Importantly, in these current times, it can also be managed remotely.  For us, while working from home during the lockdown, the capabilities of our energy monitoring systems – and ability to remotely monitor and control building services via our Building Management Systems – have paid dividends in terms of effective energy management oversight.
  4. Keep an eye on future demand side response opportunities National Grid’s Optional Downward Flexibility Management (ODFM) service came to an end on Sunday 25 October. The balancing initiative – which paid generators to reduce output or large consumers to increase consumption to avoid the system being overwhelmed when supply exceeded demand – was introduced as a temporary solution in May 2020 to help manage the unprecedented conditions of very low national demand caused by the Covid-19 pandemic, particularly when output from the country’s wind and solar generators was high.
    Delivery of ODFM required mostly renewable generators to reduce output or switch off for extended periods of time, with ‘Day Ahead’ notice given by National Grid. But some large consumers were also asked to ramp up consumption during periods of high supply.
    While the outturn of events was lower than National Grid forecast when it first launched the product, it has identified a definite enduring need for ‘negative reserve’ or a ‘footroom service’ in future summers, when the need for downward flexibility is at its greatest due to high wind and solar output.
    While it is evident that the service was not without its flaws and required significant manual handling of despatch events and data, we expect that these issues will be addressed in future product design as part of National Grid’s Reserve reform activities.
  5. Plan for a more self-sufficient future One way to manage future risk is to look at on-site generation options. There is now a great deal of choice for businesses, including CHP, wind, solar photovoltaic (PV) or biomass.  Our recent report, ‘Your Business Blueprint – The road to Net Zero’, revealed that, despite the pandemic, businesses are still planning to invest in a variety of measures to achieve their carbon reduction targets, including on-site generation.
    As well as managing market variables and reducing emissions, it also increases resilience as it means a business is less reliant on the grid.  That said, businesses need to make sure that any plans for on-site generation are scoped appropriately, so they can assess where the payback and benefits are.

Opportunities in uncertainty

The next six months will undoubtedly bring challenges.  However, within this uncertainty, we believe that there are opportunities.  With planning and a focus on sustainability, energy managers can effectively plan their supply, manage energy use, keep costs down and reduce carbon emissions.  

For expert advice from npower Business Solutions, download the Energy Management Toolkit at https://www.energy-hq.co.uk/energy-management-toolkit/

[1]  HH Demand Tariff for London area for 2020/21, as published by National Grid.