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The Energy Transition

The average carbon content of the UK electricity grid has been tumbling over the last few years, enabling organisations to decarbonise without lifting a finger.

We saw a 19% decrease in the UK electricity CO2e in 2018 factor compared to the previous year. The latest government data released in June revealed that the carbon intensity of the grid had decreased by a further 10%.

Much of this has greening has been driven by the closure of coal plants who, because of their age and emissions, aren’t able to be economically competitive with gas and renewable energy.

It’s worth remembering that the average carbon content of the grid is a lagging indicator of grid decarbonisation. It’s based on data that’s two years old, meaning the one that came out in June is based on 2017 stats. April 2017 saw the first coal free day since the industrial revolution, and of course this May we managed two full weeks without it. In 2025 all coal plants will, by law, be shut down. Translation: the downwards trend in carbon intensity is likely to continue for at least a few years.

If I’m an energy manager, I’ve just achieved a pretty big reduction in my organisation’s carbon footprint without investing a penny. Awesome!

But it raises a good question. Why bother? Why are we doing stuff to reduce our emissions when the government’s going to do it for us? I’ve spoken to sustainability people in every sector say to me their plan is to sit back and let grid decarbonisation do its thing over the next few years. It’s very rational position.

As someone who sells energy tech the falling average carbon factor could be seen as an existential threat. You could sell a CHP on carbon reduction alone a few years ago. The money saving was a bonus! Not anymore. And I remember doing business cases for PV when the carbon factor was nearly 0.5 kg CO2 for every kilowatt hour (it’s 0.25 kg CO2e now). Those things looked amazing when you did the emission reduction calculation.

Are the days numbered for onsite generation?

Of course, emissions are only half of the story. Whilst grid electricity produces a smaller carbon footprint, it’s going to take an ever-increasing share of your wallet. Those wind turbines in the North Sea need paying for and it’s us, the consumer, who’ll foot the bill. The government’s forecasts on energy prices are going in a totally different way to the carbon content – they are set to rocket in the coming years.

I have a wife and two-year-old son who aren’t fond of the off button on electrical devices. I’m not even sure if they know there is an off-button on our TV. I’ll walk into the front room after putting Hugo to bed and find the lights on and the CBeebies blaring away. “Oh for god’s sake, not again.” I’m that dad. So, energy price rises are about as welcome to me as male pattern baldness, but it seems both are on their way. My hairline’s starting to look like it’s sponsored by McDonalds.   

And it’s not just domestic consumers who’re facing a spike. The government’s ‘Updated Energy & Emissions Projections’ anticipates a 15% price rise for retail electricity in the services sector between 2018 and 2025. It suggests the price paid by organisations like universities may be as high as 15.8p per kW/h in a few years.

With the volume of electricity that universities purchase, this price rise needs to be taken seriously. The average university will spend around £2m on electricity, which represents approximately 70% of energy costs. Despite major energy efficiency programmes we’re actually seeing electrical demand rise at many universities as new buildings are built, operations go 24/7, and heat and transport become electrified.

What should organisations be doing?

Despite the falling emission factor, a university who invests in solar or wind now can still celebrate a major reduction in emissions; for every unit of electricity generated by a solar panel, 250g of CO2 is eliminated from its carbon footprint. On a 1MW solar array you could expect to see well over 200 tonnes of CO2e saved. That’s a major PR coup and something that can help market the university to new students and researchers. What’s more, this investment will not only insulate the university from electricity price rises for the next two decades, it will also enable a significant drop it their energy price. We’re seeing customer savings as high as 40% in the business cases we’re developing at the moment.

The most progressive institutions are going one step further. Not only are they making major investments in renewables and onsite generation, they’re also seeing the estate in a completely different way. Their energy infrastructure won’t be hidden from view in a basement, they’re placing it front and centre. They’re turning themselves into living labs, creating a system that combines renewables with intelligent digital control, EV chargers, air source heat pumps and storage technology. They’re bringing students into the equation, so they use the estate becomes a tool for research and teaching. Instead of doing research on a bench, they can do it on a building without impacting the building’s core functionality. These living labs enable students to interact with the environment they are living in, so they are better able to understand the theory that’s being taught to them. It’s becoming part of the university’s value proposition – learn, watch, do.

Of course, convincing senior managers to spend capital on energy projects isn’t always possible. But pretty much of the projects we’re involved with are fully financed through an Energy as a Service model, meaning the university benefits from an immediate reduction in operating costs, without spending a penny of capital.   

As the carbon factor shrinks in the years to come, so too will the PR impact of rolling out renewables. Organisations who puts off investments now will likely enjoy less ‘green PR’ in the future, whilst at the same time paying a higher price for their electricity. And institutions who invest now have a chance to place themselves at the centre of the energy revolution: transforming their estate from a piece of land with buildings on, to a living lab where every student, academic and visitor is part of one huge experiment to change the world we live in.

Investing in energy tech has never made more sense.

PS. ‘Why is there a picture of a Llama?’ I hear you ask. Well I tried searching for a royalty free photo to do with energy prices and gave up. Also I thought it might wind up our comms guys!

If you want anymore info on onsite energy systems for campuses or Energy-As-A-Service visit: www.siemens.co.uk/localenergysystems