The UK’s energy industry is in uncharted waters, and it is being impacted by conflicting forces which are above and below the waterline. Firstly, prices are rising at levels unseen in a generation, and are only predicted to increase further – this is having a knock-on impact on the economy and the consumer wallet. Secondly, from a sustainable perspective, it is clear that more must be done, and more quickly, to both protect the planet and achieve the UK’s Net Zero targets.
Other industries have had their digital moments, but the digitisation of the UK energy industry is only at the start of its journey. Can digitisation and data in particular be used to reduce electricity prices and also increase sustainability? I really think so. Let’s consider just one part of the problem and examine how digitisation and data could be applied to drive efficiencies in the balancing of the National Grid.
As most people are aware, the UK’s National Grid is one of the world’s largest utilities focused on the transmission and distribution of electricity and must be balanced to support demand. To put it simply, this means that as the consumption fluctuates, there must be enough electricity generated to meet that demand, otherwise the lights will quite literally go out.
The implication of operating an ‘always-on’ model requires the National Grid to generate more electricity than is being consumed, otherwise someone, somewhere, will have a power failure. However, this overproduction is clearly not good from a sustainability perspective and tackling climate change, or from a financial perspective, because if electricity is not consumed it is effectively wasted.
Electricity can of course be stored in a biomass or battery, and this is why the National Grid is continuing to invest in this technology, however it is at a fraction of the scale that will actually be required. As biomass technology is productised, and battery technology continues to improve along with solutions to the associated environmental challenges (with the production, transportation and disposal), these technologies will undoubtably have a major role to play – but they are not in themselves enough.
To make matters worse, over the next five years the way in which every household consumes energy is going to change drastically. More people will invest in solar panels, and even wind turbines, to not only generate and store electricity for their own homes, but also to supply the National Grid. The increased adoption of electric vehicles and increased use of electricity to heat homes will see further unprecedented changes in how we consume and store energy on a national scale. The net effect, is that accurately predicting future demand and centralised generation is going to become almost impossible without digitisation and technology-enabled change.
So, faced with an antiquated approach to balancing the demand and generation of electricity, and combined with the revolutionary changes that we are already witnessing, now is the moment to press the fast-forward button on the Energy Industry’s digital transformation, and in the context of this article, re-think and increase the use of data and data analytics to predict future demand.
Smart meters will of course play a role, but to overcome the challenges we need to focus on data. Better data, better data models, and improved analysis of the data will enable better predictions of future demand. Yes, there are challenges to be overcome: we need a national solution; we need to overcome privacy concerns and ensure consumer data is used with consent and that it is protected; and we need to manage generation when generation itself is increasingly variable as it is progressively based on renewables.
We should not be afraid to look to other countries who are further ahead in their digitisation journey. Countries like Denmark, where Energinet have for several years built and operated a centralised data hub, which has provided a strong foundation for innovation and is supporting Denmark’s continued green transition. But to achieve this the industry and regulator must come together. Perhaps the UK’s Energy Industry can take inspiration from the NHS. Through necessity, digitisation in the NHS progressed rapidly as a result of Covid-19, as more services were quickly made available online and NHS apps became the most downloaded in Apple’s App Store and Google Play.
I believe that today’s increase in energy prices and the environmental need for the UK to achieve its Net Zero targets by 2030 should create the impetus the industry needs to accelerate action and digitise.