2019: The year of the climate emergency
Extinction Rebellion protests, Greta Thunberg’s shaming of world leaders and rallying cries to declare a climate emergency across the world will be one of the enduring memories of 2019. As we look back at the year, it’s clear that the energy transition is accelerating under the weight of public opinion.
The biggest policy announcement of the year was Britain’s decision to legislate for a legally binding net-zero carbon emissions target by 2050. Britain was the first member of the G7 group of industrialised nations to make this commitment and in so doing, propelled the ‘net-zero’ phrase into everyday use. Britain is making year-on-year progress towards net-zero. According to National Grid, it is on track to generate more of its electricity in 2019 from zero carbon sources than fossil fuels for the first time since the industrial revolution. This is fantastic progress from where we were, even 10 years ago, but there is still a very long way to go!
Businesses too, are waking up to the multi-trillion-dollar opportunity and need to deliver net-zero by 2050. Investment will come in different forms, such as renewable energy, EVs, grid networks as well as smart and powerful technology to intelligently link millions of diverse assets to new markets and novel sources of value.
To accelerate this transition, we need to unleash the full force of clean energy, using powerful digital technology. Only by making a success of renewable energy everywhere, can we limit the effects of climate change. Technology is key to doing this.
Here at Origami, 2019 has been an important year, we enhanced our technology platform in a number of ways, to enable more renewable energy on the grid. This included support for the Balancing Mechanism (BM) – National Grid’s near real-time market for balancing supply and demand and supporting customers like SmartestEnergy to access this valuable market.
Origami is also supporting multiple innovation projects, investigating commercialisation of new flexibility services for Distribution Network Operators (DNOs). As DNOs transition to Distribution System Operators (DSOs), local flexibility services will become paramount. As part of the TRANSITION project, we have been running a series of market simulation workshops with our project partner Scottish & Southern Electricity Networks (SSEN). The workshops explore use cases and market rules for future flexibility markets. By participating in a trading game, we have achieved incredibly high levels of engagement from a wide range of stakeholders who are learning about how these new services will impact them.
While we war-gamed future flexibility markets, the EU approved the return of the UK’s Capacity Market, which was suspended in 2018 following a ruling from the European Court of Justice. The UK government said that they are “committed to implementing certain improvements to the scheme for the future,” which may mean new rules for types of capacity, as well as guidelines for minimum capacity entry.
For a two-week period in May 2019, Britain met its electricity needs without burning coal. This was the longest period that the country has gone coal-free since the 1880s! Going from a coal-free fortnight to a coal-free forever will require a fusion of policy and technology.
The record coal-free period was characterised by some extraordinary volatility in the energy markets, including around 11 hours of negative pricing in one 24-hour period. Negative prices are a function of high and inflexible power generation corresponding with periods of low demand. The growth of renewable energy, particularly wind (which often has high generation when demand is low) and the move in 2018 to change how system prices for imbalance cost are calculated, make volatile prices increasingly common – presenting both a threat and an opportunity for those that can quickly act.
Dealing with plunging auction prices is another challenge for energy companies to manage. Alongside Renewables Obligation (RO) commitments and Capacity Market payments, the sector is facing a raft of financial pressures that has led to at least 28 ‘new entrant’ utilities going bust since the start of 2018. The use of technology is key to mitigating trading risks and accessing opportunities in volatile markets and enabling energy companies to differentiate their customer propositions.
The major UK power cut in August lasted for only 15 minutes at grid level, yet for multiple reasons, the consequent disruption was widespread. As we lose thermal plant on the system, we need new technology to replace the services they provide. One way of doing this is by connecting more fast responding energy storage assets to the grid.
During 2019, we were pleased to connect one of the UK’s largest behind-the-meter battery projects to the Origami platform, the 9.0MW battery located at the Port of Tilbury in London.
Looking forward to 2020 and beyond, we expect to see an increasing role for powerful, smart technology to make sense of the complexity that comes from a greener, more digitalised and decentralised world. Technology is required to help keep systems in balance and reliable, to enable better financial outcomes for energy companies and to enable them to improve their offering to customers. In 2020 we expect to see an explosion of new commercial customer propositions, supported by new partnerships between energy companies and new-technology companies.
At Origami, we also expect to see a lot more renewables, more batteries and an uptick in the growth in EVs (the latter boosted in the UK by changes in tax on zero-emission company cars). The clean energy revolution is entering an exciting subsidy free phase, which will require commercial innovation powered by smart technology.
This year, we have chosen to support the 2041 Foundation as one of our charities. The Foundation will this year set off on an expedition to the South Pole. The expedition is led by legendary polar explorer, Robert Swan, using only renewable energy to highlight the importance of finding a permanent resolution to preserving Antarctica as a pristine wilderness. It will show how clean energy can be used to power our world and help preserve the Earth as we know it today and reduce the likelihood of the ice sheets melting.
We need to make a success of renewable energy – beyond building more wind and solar farms. That means having the policy, processes and smart technology to optimise and trade renewables. Success for renewables means that they must reach a price point which renders fossil fuels uneconomic, that way we can solve the intermittency problems. Only then, will we be able to demonstrate that net-zero powered by renewables is a realistic goal.
From an Origami perspective, we expect to see more users of our platform providing greater access to the Balancing Mechanism and all other valuable market opportunities.
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