2021: The urgency to deliver Net Zero
Looking back at 2020: the year that was
This is a New Year we are all likely to have welcomed more than most. 2020’s global battle with the pandemic was an extraordinary and tragic challenge that we hope will be consigned to the history books at some point, with the help of amazing scientific breakthroughs and people’s heroic efforts.
One piece of good news is that this battle has not completely distracted the global community from the other monumental battle we are waging – the fight against climate change. In 2020, we saw a clear imperative to act across the world. Green energy is now globally recognised as a “must do” – by citizens, governments, investors, and companies.
In fact, the dip in carbon emissions caused by Covid-19 lockdowns may have helped to highlight the climate cause (people seem to like fresh air and clear blue skies… who knew?!). In the UK, lower electricity demand meant cheaper renewable sources of power made up a bigger part of the generation mix. We then saw negative oil prices for the first time in history, and the National Grid reported the longest ever period without coal at 67 days. The pandemic inadvertently provided us with an unprecedented glimpse of what energy systems of the future will look like, with renewables becoming the new ‘baseload’. The associated physical and financial volatility that came along with this, such as increasingly common negative prices, highlighted the need for powerful smart technology to make such an energy system work really effectively.
Later in the year, the UK government published its Energy Whitepaper, providing important next steps to Net Zero. It included a target of 40GW of offshore wind, plans to ban the sale of new petrol and diesel vehicles from 2030, and a £1 billion Net Zero Innovation portfolio to support new technologies. The promise of these policy changes encouraged a significant growth in “Green Finance” throughout the year, a growth that looks set to continue and accelerate.
Looking ahead to 2021: the year that will be
The groundwork has been laid, and we enter 2021 with some momentum to get operation Net Zero really underway, and with the rescheduled COP26 at the end of the year to help galvanise even more commitment globally. But words are easy … action is now what is needed.
This year we are likely to see a big uplift in renewable generation, lots more energy storage assets deployed and further electrification of energy demand, with increasing sales of EVs. Energy markets will also see increased price volatility, from very high to deeply negative prices, and the physical challenges of balancing the system will also grow.
Such volatility in energy markets is a valuable opportunity for those that can act quickly. This is where powerful digital solutions will play an absolutely critical role.
Plans to build more renewables, bigger batteries, and increase the use of EVs often miss the need for the enabling smart technology that is becoming essential in order to use these physical assets economically, profitably, and reliably. I expect that the UK’s first Energy Data Strategy, due to be published this spring, will begin to address the need for this vital digital infrastructure.
This year I expect that rapidly changing energy markets will force energy companies to shift from providing static customer propositions, based purely on the commodity, to more dynamic ones – where technology helps customers adapt to and benefit from the ever-changing market conditions.
For this they will need innovative new digital solutions, and this, combined with margin and cash pressures will encourage energy companies to turn away from big one-off Capex purchases of monolithic IT systems, and instead implement modular technology solutions on a SAAS pricing model using an agile approach. At the same time, they will seek out AI solutions that go beyond “general purpose” algorithms to those that are built and optimised for the particular challenges of our energy systems.
Powerful digital solutions are mission-critical to tackle the complexity of green energy systems, to intelligently link millions of diverse assets to new market opportunities. Technology is required to help keep systems in balance and reliable, to enable better financial outcomes for energy companies internally and to enable them to improve their customer value propositions externally.
At Origami, we’re excited to support the energy industry as it navigates its way through this immense transition. We are building a suite of interoperable AI software modules to optimise renewables trading, with plans to release several exciting products over the coming year. Whilst the precise path to Net Zero may not always be clear, we’re working closely with our customers to understand their needs and deliver the solutions to remain agile and accelerate the energy transition... all with the can-do philosophy of “we’ll find a way”.
Find out more about Origami’s real-time energy optimisation software solutions here.