Our CEO, Peter Bance, shares his views on recent recommendations from the UK Government’s Energy Digitalisation Taskforce about the role of digital infrastructure in the modern energy system – and what this means for firms at the project level.
“Digitalisation is no longer a nice to have – it is essential in decarbonising Britain’s energy system and will need to be deeply embedded into our energy system if we’re to meet our ambitious and legally binding net zero targets.”
That is the view of Laura Sandys, non-executive director of the UK Government’s Energy Systems Catapult and chair of the Energy Digitalisation Taskforce. Laura said this on 17th January 2022, when the taskforce shared recommendations for how the UK energy system needs to adapt so it can successfully reach net zero.
As a non-executive director at Energy Systems Catapult and CEO of Origami, it should come as no surprise that I wholeheartedly endorse her view. We forecast in our 2022 predictions that digitalisation would drive the green energy transition forward this year.
With that in mind, here are the taskforce’s main recommendations for the energy system as a whole; and my take on what this means for firms at a project level.
Taskforce proposals
The taskforce emphasises the need for digitalisation of the UK energy system so it can cope with millions of new assets, from grid-scale batteries to electric vehicles and heat pumps. All of these assets will need to seamlessly coordinate to create an efficient and resilient green energy system that has the widespread support of businesses, politicians and the public.
The report recommends that the UK needs to:
Create a digital spine for the energy system to enable plug-and-play options and encourage whole system interoperability and standardised data sharing.
Mandate carbon data monitoring to improve visibility and understanding of the impacts of projects, and drive future policymaking and consumer actions.
Establish a digital delivery body to develop core public interest assets quickly and independently from vested interests.
Develop a customer consent dashboard so consumers know who can access their data and why. This is vital to achieving public buy-in.
Mandate that consumer devices have a minimum level of smart functionality and connectivity to unlock flexibility in the system.
These recommendations build on findings of the UK’s Energy Data Taskforce, which reported in June 2019 on the importance of data to unlocking a low-carbon economy. Both make the clear case that data and digitalisation are key to the energy transition.
However, all too often this digital transition is forgotten.
Policymakers and business leaders know the energy transition will require change in the physical world, including more solar panels, wind turbines, electric vehicles, and large batteries. But there is a general lack of awareness about the transformation we need in digital systems to get us to net zero – and, moreover, how digital change will underpin the success of changes to that physical infrastructure.
This will require a fundamental shift in the way that companies plan projects and manage day-to-day operations.
How companies can adapt
Most developers and investors that we encounter are unclear about how they will need to adapt for the post-subsidy energy system.
These companies currently plan projects knowing what hardware they are going to use; where they want to secure project finance; who is going to build and operate an asset; and how they plan to sell the power. But they rarely think about what software and data infrastructure they are going to use. That is a mistake.
In the past you could get away with this. If you built a solar farm, you would do so in the knowledge that you would sell the power on a power purchase agreement with a government-backed contract. But that is no longer the case.
For an individual green energy project to be viable in the post-subsidy world, you will need to be able to dynamically monitor and manage everything. Your project is likely to change business model repeatedly throughout its lifespan, and you will need data and digital systems that help you do that as effectively as possible.
This means software is now as important to your project design as hardware; and, in future, your solar or storage project will only be viable if you can specify, early in the development process, which digital solution you plan to use.
Without the right digital brain, you won’t be able to manage your solar or storage assets as profitably as possible. And that will be the difference as to whether they will make enough money over their lifespan or not. It is as fundamental as that.
The bottom line
The UK energy market is increasingly complex and dynamic – as are others around the world – and the assets that succeed will be those that optimise their commercial performance dynamically. Eventually, that could be every second of the day.
That is clearly the direction that the Energy Digitalisation Taskforce sees us going – and the impact will be on the real money that companies put into their projects. In short, getting the right digital brain will be crucial to your asset management plans.
This is no longer a nice to have. It’s essential.