From blockchain-based utility suppliers to intelligent tech in energy storage, Tonik Energy MD Chris Russell predicts the future of the energy industry in 2019
More electric vehicle charging points and the adoption of blockchain technology are among the key drivers in 2019 that could shape the future of the energy industry.
That’s according to the boss at UK renewable energy supplier Tonik Energy, who believes there will be a wave of new energy players using new tech to create better user interfaces for managing accounts.
But Chris Russell, managing director of the Birmingham-based company, also warns domestic solar power generation could face an uncertain future.
He says: “2018 has been an interesting year for the energy industry – suppliers are operating in a hotly-contested marketplace that’s has been fraught with risk, competition, lots of regulatory change, as well as new challenges and technology.
“However, despite all of this, and the fact that the industry is regularly used as a political football, there are some interesting themes emerging which not only represent real challenge – but also present some amazing opportunities for the energy market in 2019.”
Here, Mr Russell outlines his predictions for the future of the energy industry, beginning in 2019.
Domestic solar power generation uncertain in future of the energy industry
It has long been the government’s intention to remove the payment for small-scale renewables in 2019 - and, since 2015, it has been proposing to do something to address the “exported” electricity value of FIT.
With that in mind, in a summer consultation, the Department for Business, Energy and Industrial Strategy (BEIS) stated it was effectively removing both sets of payments to generators from April 2019, and that generators – normally small households – would need to “go to market” to get the value that they’re delivering to the system.
Sounds practical, right? Well, not really.
For a home generator to go to market and set up something called a Power Purchase Agreement (PPA), they’re effectively being treated and asked to take the same measures that a large offshore wind farm or large commercial solar farm would need to take in order to get paid for their electricity.
And it’s really not straightforward to navigate, even for a massive generator.
We’ve seen a really successful campaign from the Solar Trade Association – something the Tonik team was heavily engaged in and which we supported as a business – which managed to change the opinions of the regulator and now it’s going back to the drawing board.
The return on investment for solar post-FIT is small, so making export work is going to be critical to continued success of the sector. At least in the short term.
We’re already seeing promising forecasts for the future ahead – with projects focused on the levelised cost of energy (LCOE, or the total cost of power over a generator’s lifetime) looking like solar will be in the £50 to £60 range.
For context, that’s competitive with massive offshore wind, and gas generation – which is an ancient, redundant technology.
For 2019, the future of classic rooftop solar looks uncertain - helped in no small part by the absence of stability provided by our policy-setters - but this is likely to be one technology that will just keep going from strength to strength.
Intelligent technology will help energy storage ideas
In theory, next year is when we can expect the Tesla Powerwall to really make an impact in the UK marketplace.
This has been somewhat imminent since Tesla launched the product, but we think that 2019 is the year where energy storage is sure to make its mark.
The signs are mostly promising for the storage market, with new technologies, new business models and some interesting announcements in this space.
The regulator has also taken some much needed - and long-overdue - steps to reduce some of the confusion around how a residential battery can be installed in a “compliant” manner.
Storage is a tough concept to grasp and generally pretty tough to deploy. Watch this space.
Low-carbon transport continues to rise as EV charging points become more widely available
Published figures show that electric vehicle (EVs) sales in the UK have risen dramatically over the past few years.
In the first half of 2014, there were just 500 EVs registered per month, whereas we’ve seen more than 4,800 registrations a month in 2018.
The plug-in car market now makes up 4.2% of all new cars sold in the UK.
That’s significant progress, but the National Grid has recently just doubled its growth forecast of EV uptake out to 2050 - this is just the beginning.
Cost parity with combustion engine vehicles is projected to kick-in around 2024, but we’ll see significant moves in this part of the market before then.
The government is supporting the market with new policy initiatives - such as 2018’s Automated and Electric Vehicles Act.
The new policy aims to deliver new powers to allow for upgrades to motorway services and allow regional governments to request charging point installations at petrol stations in their area, in order to cope with and facilitate increased EV driver demand.
It’s becoming a hotly-contested space, with recent moves from big energy players like Shell and BP, into the sector, and new names popping up almost weekly to announce a new partnership or network roll-out.
When compared to the likes of a normal forecourt, to get miles pumped into your car, EV drivers currently need to be a member, require a specific card and have to worry about a pump being available.
This is a massive barrier to people taking the plunge and making the switch to zero-tailpipe emission driving.
2019 is undoubtedly the year we’ll see a big inflection on EV charger availability and we believe the issues customers face when navigating the innumerate, competing, charging platforms, memberships and confusing subscription models will begin to be challenged.
New energy players emerge - using blockchain to create better user interfaces
2019 won’t be the year it goes “bang”, but it will be telling for what’s to come.
We think we’ll see a number of new players enter the energy space, but we don’t expect them to be the classic utility of old.
We expect these to be “virtual” players, or platform providers.
Following peak-Bitcoin in very late 2017, a number of trials, tests and new businesses emerged.
This was topped with an announcement from Amazon that it’s launching a service to help clients develop platforms for free, mean 2019 will be key in the development of blockchain markets for UK energy.
Blockchain can be complicated, but in short, these platforms hold the potential to increasingly eliminate the “middle man” of energy – big, centralised, market players and networks – and can directly connect renewable energy producers to users.
Expect to see some interesting players emerge who are firmly focused on delivering slick platforms, new user experiences and managing vast volumes of data in a friction-free, secure manner.
New energy will be more about platforms and technology integrations, less so on hardware, assets, trading desks or physical locations.
2019 will be the year where there is an increase in focus on how technology such as blockchain can benefit the energy market, inform emerging policy and erode many of the pain points customers experience in the sector today.