INDUSTRY COMMENT
WHY UNDERSTANDING THE ENERGY MARKET IS MORE IMPORTANT THAN EVER By Anthony Ainsworth, COO at npower Business Solutions
In its recent Energy Security Strategy, the government outlined its plans for making the UK more self-sufficient when it comes to its energy supply. However, while the measures announced around increasing renewable energy capacity and accelerating hydrogen production are to be welcomed, some felt it missed an opportunity to help struggling businesses right now. As a result, there has never been a more pressing time to understand how
the energy businesses use is generated, traded and supplied, particularly for energy intensive sectors such as manufacturing and industry, to help energy managers make an informed decision about their energy strategies. The energy market can be difficult to navigate, particularly as it can
change on a daily basis. So, in this article, I hope to answer a few of the common questions we hear when it comes to energy supply, what is influencing the prices you pay, and some of the key steps to take to protect against market volatility.
WHERE DOES OUR ENERGY SUPPLY COME FROM? The largest share of our electricity – almost 60% – comes from low-carbon sources, including 28.4% from wind and solar, 14.7% from hydro and other renewables, and 16.1% from nuclear. The share of our electricity generated by carbon-emitting fossil fuels – mostly natural gas – has reduced to less than 41%. In addition, we import 8% from other countries via our growing number of undersea interconnectors, of which 66% was from low-carbon sources, for example, from French nuclear and Norwegian hydro.
DO WE RELY ON IMPORTS? Just over 25% of our energy was imported in 2008, peaking at nearly 48% in 2013. But as the UK’s wind generation capacity has increased – and our overall energy consumption reduced due to increases in energy efficiency and a decline in industrial activity – it’s now around the 36% mark.
IF RENEWABLES ARE GROWING, WHY ARE ENERGY PRICES SO HIGH? Due to the move away from coal, gas has become our dominant fuel, which allows it to influence the price of power. As so much power generation relies
on gas, power markets therefore closely track gas markets, despite almost half the UK’s electricity now being supplied by low-cost renewables. And, rather than having separate markets to trade each energy technology separately, or having a combined market, all generation – regardless of source – is instead bundled together and traded as units of energy (MWh), with gas values influencing the price.
WHAT IS DRIVING WHOLESALE PRICES? A large range of factors can influence energy prices. Firstly, there are straight-forward supply and demand dynamics – the balance between what’s being produced and what’s needed. Weather is another key factor. As well as seasonal variations, unexpected or sustained colder or hotter temperatures can increase or reduce forecast demand. Wind and sun availability are also important. Political issues can play a big role too, as has been evident with Brexit and is currently a large influence due to the ongoing situation with Russia; and growing economies in Asia are also creating increased competition for gas.
TAKING ACTION NOW So, what can organisations do now to reduce risk in these volatile times? • Consider your contracts: now more than ever it is important to review your purchasing strategy to ensure it reflects the current level of risk appetite and that electricity and gas budgets are realistic in the current climate. • Maximise energy efficiency: it goes without saying that the less energy you use, the less you will pay. Energy efficiency really is a no regrets action to take. • Become more self-reliant: investing in sustainable on- site generation such as solar, wind or combined heat and power (CHP), has multiple benefits, not least making your organisation less reliant on the grid. • Consult an expert: work with your energy partner to help you make a strategic plan.
For energy intensive industries, gaining a greater understanding of the UK energy market is crucial to making an informed decision about their energy strategies. That is why we have launched a series of ‘Energy Made Simple’ reports,
which are designed to provide a straight-forward explanation of all the key aspects of energy that will help you become more informed about the power and gas your organisation consumes. These can be downloaded from:
https://npowerbusinesssolutions.com/focus-on-commodity.
npowerbusinesssolutions.com
LASER CUTTING FIRM SWITCHES TO GREEN ENERGY THANKS TO GOODWE
Inverters from GoodWe, a leader in photovoltaic (PV) solutions, are powering ADS Laser Cutting’s site in Leicester. Here, GoodWe has partnered with Environmental Roofing Services (ERS) and ADS Laser
Cutting to provide a green supply of energy and protection from rising energy costs. In January this year, four GoodWe 100kW HT inverters were installed to convert PV
www.energymanagementmag.co.uk
energy generated by solar panels on ADS Laser Cutting’s East-West roof. Eugene Lucarelli, marketing manager at
GoodWe UK, said: “We are very happy with ADS Laser Cutting’s decision to make the switch to solar power. We designed the HT inverter to save users money on installation and energy bills, and they have taken great steps with GoodWe to futureproof themselves against further energy price increases.” Following the successful installation, another
400kW of GoodWe solar inverters have been authorised, bringing the total capacity to 800kW once the project is completed. ADS Laser Cutting’s solar setup will save an estimated 414,000KG of carbon emissions, similar to the annual carbon
produced by 90 cars driven for one year. ADS Laser Cutting chose GoodWe’s HT inverters
for their high efficiency and small size. Exceeding 100kW, they are designed to reduce the LCOE (Levelized Cost of Energy) and maximise wattage in a small footprint, making them the natural fit for commercial sites in the UK. The carbon savings of ADS Laser Cutting’s installation will equal just under 1,000 barrels of oil. Duncan Keates, managing director at ADS Laser
Cutting, said: “We are proud to double-down on our commitment to renewable energy. Solar has come a long way in the past several years, and we are glad to be using it to power our site, knowing the good we’re doing for the environment.”
goodwe.com
ENERGY MANAGEMENT - Summer 2022 5
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44
