The Fourth Industrial Revolution - what does it mean for energy?
We’re living in an era that’s expected to have as important an historical impact as the last Industrial Revolution. Today, advancements in technology, science, engineering and innovation are developing at top speed and we’re starting to truly understand and uncover the power of their potential. Davos termed this the “Fourth Industrial Revolution”, and it has great significance for the way we behave at work and at home. All in all, it’s pretty exciting.
This Fourth Industrial Revolution (4IR) carries the key to making fundamental differences in the world. It will enable us to work smarter and more efficiently and will help us uncover solutions to some of the world’s big issues. This is particularly true of challenges such as climate change, with technological progress helping us to not only better understand and contextualise the issues facing our planet, but also to develop solutions that tackle further climate change.Technologies that protect our planet are crucial to our projects a Ørsted, helping us to develop our projects further. These include developing, building and operating wind farms, bioenergy plants and innovative waste-to-energy solutions. We also provide smart energy solutions for our customers, helping to de-carbonise energy further.
Accelerating the energy revolution
The energy sector has evolved enormously in recent years and while this evolution has been driven by many factors, it has been made possible by 4IR advancements.
Decarbonisation of our energy sector is fundamental to achieving the UK’s climate change targets. Along with transport, energy has the biggest contribution to make in reducing our carbon emissions and slowing climate change. Statistics published by the Department of Business, Energy and Industrial Strategy (BEIS) this year showed that wind power volumes in the UK rose by 34% last year compared with 2016, and that just 5% of generation was supplied by coal during 2017 as opposed to 20% only five years earlier. In fact, 30% of total electricity was produced by renewables last year, reaching a record of 99.3TWh. The journey ahead remains long but the transformation of our energy mix is happening in leaps and bounds.
Decentralisation is another key feature of today’s energy sector. We’ve moved away from having the bulk of generation capacity held by a handful of power stations. Volumes are now spread over thousands of smaller units nationwide and a mix of generation technologies. This has benefits in terms of reducing carbon emissions and spreading risk and generation locations. It also creates self-generation opportunities for businesses and households.
This journey would not have been possible without the development of affordable generation technologies, or without the analytical computing capability to manage the supply and demand from such a broad range of assets. IT advancements allow us to become more sophisticated in the way we run our energy system, more responsive and more efficient; all of which provides the space for new technologies and ways of working to become a reality. In tandem with the ‘big picture’ benefits, IT developments have also enabled businesses to take greater control of their assets. Businesses now have the tools they need to manage a more complex, cost effective and efficient operation across their own site portfolios. As a consequence, organisations are reaping fantastic operational efficiencies compared with 10 or even 5 years ago. It’s all down to their ability to analyse data, scenario plan and employ advanced scheduling software and equipment, as well as smarter hardware assets.
As energy costs are high, businesses are making each pound spent on energy work harder than ever. Consumption wastage has been trimmed by many organisations to save costs and businesses are more savvy than ever before when it comes to planning time of use, shifting demand patterns to avoid peak costs and embracing demand side flexibility as a means of cutting costs and providing much-needed revenue streams.
Flexibility: a key ingredient in the new energy mix
As the energy market itself becomes more sophisticated and the technology more advanced, new opportunities continue to open up for businesses to operate more efficiently, sustainably and cost effectively. Careful operational planning is a crucial element of effective cost and carbon management and should include a number of considerations:
Time of use may sound old hat, but it remains absolutely vital. Avoiding Triads and peak Capacity Market and distribution charges will still cut costs - but businesses should also go further than that and factor in wholesale prices. Can maintenance and outages be moved to the summer, for instance, when energy costs are lower? And how could they make better use of embedded generation to protect against wholesale price surges?
Flexibility has fast become a standard feature of most business’ energy strategy. The need for demand side flexibility, to provide system balance in the face of a new generation mix, has driven the development of a huge range of demand side flexibility opportunities. More established schemes such as Short-Term Operating Reserve (STOR) and Fast Frequency Response schemes remain, while newer schemes are also being explored, such as the upcoming trial for short-term (within week) frequency response, due to come into fruition in June 2019. DNOs, aggregators and suppliers have their own versions as well, with different requirements and revenue opportunities, so it’s worth keeping up-to-date to see what works best for your business.
Onsite assets can be invaluable tools for maintaining control and providing contingency in the event of power cuts. Beyond that, on-site generation facilities can also provide revenue opportunities via export and - where low carbon facilities are installed - green benefits.
The resource gap
Thanks to our changing environment, the role of the energy manager has also changed. There’s now a much greater emphasis on environmental management, corporate and social responsibility (CSR), data analytics and operations. The remit has broadened too: the rise of electric and hybrid vehicles means that fleet (and associated charging) is increasingly moving into the domain of those people responsible for their organisation’s energy. However, the size and skills of those teams have not always broadened at the same rate, giving rise to a resource gap.
To operate effectively, it’s vital that businesses understand in detail the relationship between energy and their business, but the pressure to build knowledge and work as efficiently as possible can put strain on stretched internal resource.
To truly capitalise on the opportunities available, the relationship with suppliers must change to become more collaborative. Suppliers need an in-depth knowledge of their customers’ businesses, effectively becoming an extension of their team. Our dedicated team will take time to understand each individual business, providing the solution that suits their needs. We use unique flexibility tools that we’ve developed in-house, such as Renewable Balancing Reserve, to improve efficiency and financial return. We understand that time and expertise are frequent blockers to adopting new technologies or ways of working. Access our smart flexibility solutions enable our customers to take advantage of 4IR, to progress their business and continue to compete within their respective fields.
It’s time to take a new approach to energy. We’re operating in a 4IR world and businesses have an unprecedented opportunity to improve their operational efficiency and reduce their carbon footprint. We’d urge them to gather the insight they need to truly understand the implications of new technology for their systems and processes, and how our changing energy market plays into this innovative new model. External support and advice will be invaluable for businesses who want to survive, grow and advance; this includes an ability to carry out detailed planning, taking into account the broader range of approaches and technologies available. By embracing the improvements that are being made across science, engineering and technology, organisations stand to make a real difference to their bottom line. An exciting revolution indeed.