COP26’s race to zero begins

EIC highlights the key points made in COP26 President Alok Sharma’s speech, which symbolised the beginning of the organisations ‘Race to Zero’ campaign, and how business leaders can take a poll position despite the starting gun having already been fired.

Mapping the future

News that the UK will postpone its hosting of the UN climate change conference (COP26) was not unexpected, given the necessity for social distancing that COVID-19 has imposed, however it did raise concerns over the UK’s determination to enact a green recovery post-lockdown.

While the UK track record may, in part, justify some of these concerns, individual safety is not the only benefit of such a delay to talks, for one the nations taking part will need a clear idea of the state of their respective economies once lockdown ends before committing to new policy. 

And from a psychological perspective it might be argued that due to the all-consuming nature of the pandemic when it comes to public and government attention, the conference would not receive the attention necessary if it went ahead this year.

How far we’ve come

Despite the conference now being slated for Q4 2021 (-12 November), Alok Sharma gave a speech last Friday that reasserted the UK’s ambitions and responsibilities with regards to the 2050 net zero target and how the race to zero was already hastening its completion.

The UK, in collaboration with Chile and the U.N., are already leaders of the Climate Ambition Alliance – representing over half of global GDP – however Sharma insisted in his speech that “…we must go further”.

Sharma outlined some of the UK’s major achievements in reducing carbon emissions in the last thirty years:

  • Since 1990 the UK economy has grown by 75% while simultaneously reducing carbon emissions by 43%
  • In the same time, the UK has two offshore wind turbines able to power 2,000 homes, as of 2020 the UK is leading nation for offshore wind capacity
  • Globally, the cost of solar and wind power have dropped by 85% and 49% respectively
  • Over two thirds of the worlds nations can now generate renewable energy cheaper than coal

While details of the path forward remain scant – not surprising given the reasons for postponement – Sharma made it clear that liberating capital to fund green initiatives and widespread support for electric vehicles would be crucial to the UNFCCC’s success.

Approximately 1,000 business leaders, representing revenue totalling in excess £3.5tn have committed to the scheme including British motor giant Rolls Royce. According to the United Nations Framework Convention on Climate Change UNFCCC, around 75% of these businesses have already developed strategies and targets aligned with the 2050 target.

Dr. Alison Doig, international lead at the ECIU (Energy & Climate Intelligence Unit) recently commented on the danger of complacency in the opening stages of such a race. 

“This is not, however, about pushing climate action to some date in the future; no entity can reach net-zero in 2050 without starting now… participants will have to present delivery plans, including setting interim targets for the next decade, by the time COP26 opens in Glasgow next year.”

Clean energy was the first element of the British economy that Sharma cited when referring to the need for green growth after lockdown, making it a pressing issue for business leaders looking to get a head start on net zero. EIC provides comprehensive  support and advice to businesses in the procurement, management and generation of alternative energy sources. Each service forms an element of the robust energy management service that EIC offers.

 

 

 

 

 

 

EIC’s Utility Belt: Tips for more effective utility management

EIC outlines its best advice for intelligent energy management, minor changes that can yield significant savings and the importance of consistency in establishing new workplace cultures.

Technology vs culture 

The majority of your utility belt will be focused on the technology that you are currently using or could utilise in future however there is also a short section on the culture within your business and how that can factor into your success.

Heating and Ventilation 

Comfortable ambient temperature has become something of an assumption, commercially speaking, however the technology behind it often remains unexplored except to establish its basic controls for the user. Given that air conditioning alone can account for up to 30% of a site’s energy consumption, this is a significant oversight that, sadly can be solved very simply.

Sealing off or switching on 

A common method of controlling indoor temperatures is by sealing buildings, preventing windows being left open, however this can actually exacerbate the overall costs trying to be mitigated. It means air conditioning will be working overtime during hotter periods but also that air circulation may take a dip, meaning higher concentrations of CO2 and dampened performance from staff as a result.

IoT connectivity across sites can use occupancy monitoring and responsive temperature and air quality control to mitigate these issues. The provision of real-time data streams means that you can control individual spaces across large sites, maintaining utility usages that are responsive to demand and need.

Casual is smart 

Enstating a casual dress code during acutely hot or cold weather conditions means that staff will be able to offset their own demand on heating or cooling, not to mention be more comfortable in their work. 

Dig for victory

Planting trees is also a relatively cheap and environmentally friendly way to offset heating costs, since they provide shade and fresh oxygen as well as absorbing latent humidity in the air.

Lighting 

Intelligent lighting control can save 30-50% on energy costs automating this utility according to occupancy and respective demand means that you will not have spaces unnecessarily drawing power that isn’t being utilised. 

Let the sunshine in 

Not always an option depending on how sites are initially designed, however by using automated lighting, you can schedule lights to power down during daylight hours and reactivate once night falls. 

Using what you have 

The installation of LED bulbs for better efficiency and a longer lifespan can be an added boost to light use efficiency without being disruptive to pre-installed equipment, motion sensors are another low-impact option that help ensure that light is never wasted.

Professional culture 

As social creatures, culture is effectively the software that our communities run on, understanding this means that you can leverage your professional culture to become more energy efficient with a minimum of cost.

Empowering your team 

The use of environmental posters can help remind team members that their actions have weight in something larger than themselves. Small adjustments like the use of power strips also make it easier for them to adopt the positive habits that will be the foundation of your new professional culture. 

Communicate that computers should be shut down at the end of the day rather than left in standby, especially before the weekend. It has been estimated that a company with 200 PCs could save £12,000 annually this way. 

Breaking ranks 

2020 has demonstrated many things, among them our ability to work remotely and effectively and how doing so can help foster trust between managers and staff members. Encouraging this way of business means you can reduce or re-purpose the amount you are spending on office space and its attached utility costs. The same can be said of meetings that might’ve taken place on-site, by using video technology to bridge these physical gaps you reduce the occupancy on your own sites and the utility usage along with it.

Measure for measure 

Meters and sub-meters are essential tools in understanding the energy needs of a site as well as what areas have the highest concentration of usage. Armed with this information you are better equipped to make policy decisions pertaining to both technology and culture within your utility management. The Carbon Trust has found that a site meter can save 10% in energy costs while sub-metres, which allow you to pinpoint areas where demand is highest, can offer a further saving of 30%.

Going the extra mile

There are a number of additional features that can be added to the design of many sites to both off-set and reduce utility costs including on-site solar generation & storage, combined heat and power and demand side response schemes.

EIC can create a comprehensive and all-inclusive package for your business that oversees all aspects of utility management from metering & monitoring to IoT empowered devices that keep you connected to site data 24/7.

Open architecture technology affords access to all your vital business systems, meaning EIC can communicate with, control and report on any aspect of any site including heating, lighting and ventilation. Our services page contains full details of our offerings.

 

 

 

 

 

COVID-19: Advice for Energy Professionals

EIC provides counsel to our corporate clients looking for information around to which formulate strategy for mitigating the fall out of COVID-19 within the energy field.

A battle of morale

Since it first began its initial spread, COVID-19 has subjected the planet to a level of disruption unrivalled since World War Two. However, the advantage to be claimed here lies in how much the pandemic has exposed our systemic fragility and the areas in direst need of adjustment and future development.

First of all, assurance should be prioritised both to customers and to shareholders, the UK is privileged in its possession one of the most robust energy supply services in the world and as such concerns for supply are minimal.

The National Grid have reported that in 2019, the majority of the UK’s annual electricity consumption broke down as 21% commercial, 30% domestic and 26% industrial. Obviously these will be subject to change over the coming weeks, as self-isolation and working from home become the norm, however the current estimation is that there is an “extremely small” chance of the grid becoming overwhelmed.

Using Italy as an example, electricity and gas use are actually expected to decrease rather than increase.

The economic uncertainty that COVID-19 has brought, means that staff as well as shareholders are worried, about job security, financial stability and their own health as well as that of loved ones.

Staff engagement during this crisis will be essential to maintain morale as well as to ensure that team members are receiving whatever added support they may need under the circumstances to continue to communicate and collaborate effectively.

Remote communication and conferencing have, thankfully, become increasingly commonplace in recent years and can now be leveraged to maintain employee relations. Consider which technologies, be they apps or direct software might best serve you and your team’s needs.

How EIC can help

Beyond staff logistics, there are also considerations to be made about site-bound resources, equipment may need to be powered down or put into stand by for quick reactivation when lock-down ends, lighting and lock timers may need to be adjusted etc.

Additionally, if you are already employing automatic utility data capture, perhaps the system you are using needs to be adjusted or paused to prevent inconsistent results being track and integrated in future analyses. Are staff periodically visiting site and will they have specific utility needs that must be accounted for?

EIC are specialists in providing thorough, accurate and applicable building management services that can be controlled entirely from a single, remote platform. The functions included in our bespoke packages range from lighting and ventilation control to critical systems like fire, security and CCTC.

The integration of these separate elements allows you to formulate a building-wide strategy that reflects all its needs without getting bogged down in a torrent of data. Further information about the solutions we offer can be found on our services page.

 

Last call for Triads

National Grid have published the three Triad dates for the 2019/20 season, which are listed in the table below. For an eighth consecutive year EIC has successfully called an alert on each of these days.

There was a significant reduction in the number of Triad calls this year with EIC only issuing 13 alerts in total, nearly half the number called the previous winter. This compares favourably with other suppliers who called an average of 24 alerts across the Triad period.

Triads are three half-hour periods with the highest electricity demand between the start of November and the end of February. Each Triad must be separated by at least 10 clear days. This means consecutive days of high demand won’t result in multiple Triads. If consumers are able to respond to Triad alerts by reducing demand then they will be able to lower their final transmission costs.

Lowest peak demand for 27 years

Peak demand is at its lowest point since 1992/93 and is now 14 GW (~24%) lower than the peak of 2010/11. There are a number of factors that have contributed to the fall in peak demand over the past decade. These include improvements to the energy efficiency of appliances, an increase in LED lighting and a rise in embedded generation.

Embedded wind output peaked at 3.4 GW during the Triad period. As embedded generators are connected to local distribution networks, this displaces a similar amount of demand from the transmission network. Therefore, peak demand is typically higher on days with low wind which increases the risk of a Triad occurring. This trend can be seen in the graph below which shows that for every 1 GW increase in embedded wind output there was an associated drop in peak demand of 0.9 GW.

Mild January leads to new record

For the first time since the Triad methodology was implemented, all three Triads have occurred before Christmas. This is mainly due to the mild and windy weather conditions experienced so far in 2020.

In terms of temperature, we’ve seen the mildest January since 2007 and second mildest in past 30 years. Across the Triad season only six weekdays had an average temperature below 3°C with only one of these occurring after Christmas. This compares to 17 the previous winter and 23 for the 2017/18 winter.

Wind generation increased throughout the Triad season with a pre-Christmas average of 6.5 GW significantly lower than the January and February average of 9.2 GW. As the weather conditions in November and December were generally colder and calmer, this increased the probability of Triads occurring during this period. Subsequently, all three Triads fell before Christmas on days when temperatures were below 4°C and wind power was less than 5 GW.

Demand response results in March peak

Peak demand on 5th March was higher than any day within the Triad period which can be seen in the graph below. The weather conditions on this day were demand supportive with an average temperature of 4°C and wind power around 5 GW. In comparison, on the 20th and 21st January weather conditions were similar, however peak demand was around 1.7 GW lower. This demonstrates the effect that Triad avoidance has had on reducing peak demand over the past few years. It also suggests that peak demand may start to increase after next winter without the incentive to consumers of reducing transmission costs. The elimination of a number of embedded benefits for generators is expected to limit the growth in embedded generation which will also have an effect on peak demand.

Demand response also led to a Triad falling between 4:30pm and 5pm, which is the earliest occurrence in 22 years. This Triad was, in fact, missed by one supplier who advised consumers to reduce demand between 5pm and 5:30pm. As some businesses are only able to reduce demand for short periods, the largest volume of demand response is typically seen between 5pm and 6pm. This has the effect of flattening the evening peak and increasing the risk of the peak half-hour falling either side of this window, as was the case on 17th December. All 13 Triad alerts issued by EIC covered the correct HH period, comparing favourably to an average success rate of 78% across other suppliers.

TCR Final Decision

In December, Ofgem published their final decision on the Targeted Charging Review (TCR). The main outcome of this decision is that from April 2021 the residual part of transmission charges will be levied in the form of fixed charges for all households and businesses. This means that there is one final chance for consumers to benefit from Triad avoidance over the 2020/21 winter period.

The TCR aims to introduce a charge that Ofgem considers is fair to all consumers and not just those able to reduce consumption during peak periods. For the majority of consumers these changes will lead to a reduction in transmission costs. However, for those who are currently taking Triad avoidance action it is likely that their future costs will rise.

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Our Market Intelligence team keep a close eye on the energy markets and industry updates. For the timeliest updates you can find us on Twitter and LinkedIn.

Stay ahead of changes as the clocks spring forward

This weekend will see the official start of British Summer Time (BST), as clocks will spring forward one hour on Sunday 29 March 2020. How can IoT controls help you adapt to the clock change?

The clock change accelerates the seasonal trends towards lower demand during the warmer, lighter summer months.

Historically, the scale of peak power reduction following the clock change has been around 10%. However, early forecasts show an expected 5% drop in average demand for the week following the change. An unseasonably mild winter has kept demand levels depressed in general this year.

The advent of demand management and significant developments in energy efficiency and IoT controls have made the UK consumer more proactive when it comes to when and how they use electricity. It can be seen in the graph that overall demand, before and after the clock change, is trending downwards.

The role of renewables

The increase in wind and solar capacity in recent years has contributed to the overall demand reductions. Higher volumes of on-site renewable capacity allow more generation to be provided off-grid as homes and businesses generate their own electricity supply during windy or sunny spells. This reduces demand on the national transmission system. The high levels of solar availability during the summer season were a particularly strong influence on demand levels this year as on-site solar panels increased embedded generation, reducing demand requirements for the transmission network.

Renewables continue to deliver a growing percentage of the UK electricity mix. The 2019 share for wind, solar, hydro and bioenergy electricity sources was 31.8%, up from 27.5% in 2018.

How clock change impacts behaviour

The graph above shows how the peak demand changes before and after the clock change. The earlier evenings cause an increase in electricity demand as consumers use more sources of light and heat. Post-change, a longer day-time means that less lighting is used through the day and also has the effect of pushing daily peak demand to later in the evening.

The graph shows that over the last five years before the clock change, peak demand occurs at around 6.30pm in the weeks leading up. However, once the hour is gained peak demand occurs later in the day, at around 8.00pm on average.

The impact of coronavirus

As the COVID-19 situation has developed it has become increasingly clear that there will be an impact to demand levels. The graph below shows the effect of the temporary closure of schools and some businesses, with peak demand forecast to fall around 1GW on average week-on-week. The combination of the further closure of offices and the clock change will likely see demand drop heavily over the coming week.

React to changes in real-time

How can you best react to changing demand patterns and sources of generation? How can you ensure time-consuming but critical processes affected by the clock change are carried out efficiently?

With IoT-enabled controls, your business can access all the key information about your sites usage on a single platform. This allows you to make instantaneous changes to multiple sites at the touch of a button.

One of our multi-site clients previously spent three weeks making adjustments ahead of the clock changes. This involved engineers attending each site and changing multiple systems. With our system we could make the same changes in a matter of seconds.

STAY INFORMED WITH EIC INSIGHTS

Our Market Intelligence team keep a close eye on the energy markets and industry updates. For the timeliest updates you can find us on Twitter and LinkedIn.

Science-Based Targets

A number of large corporations are leading the way in a bid to tackle climate change, with science-based targets.

What are science based targets?

Science-based targets are ambitious emissions reductions objectives, set out by businesses to specify how much they need to reduce their carbon emissions by, to limit temperature rises through global warming. They are considered a positive way to transition to a low-carbon economy.

This transformative action is a consequence of the Paris agreement in 2015 where 195 of the world’s governments committed to prevent climate change. A target was set, limiting global warming to below 2°C above pre-industrial levels, to a level of warming of 1.5°C.

The targets set for businesses to reduce GHG (greenhouse gas) emissions to meet this target, are referred to as ‘science-based’ if they are in-line with this temperature goal.

A united initiative

An initiative for this was set up by CDP, World Resources Institute (WRI), the World Wide Fund for Nature (WWF), and the United Nations Global Compact (UNGC). It focuses on companies that have set science-based targets to highlight the positive effects such as increased innovation, strengthened investor confidence and improved profitability.

In addition, the initiative:

  1. Defines and promotes best practice in science-based target setting via the support of a Technical Advisory Group.
  2. Offers resources, workshops and guidance to reduce barriers to adoption.
  3. Independently assesses and approves companies’ targets.

What are the benefits of setting science-based targets?

There are many benefits to setting science-based targets. As well as saving the planet it;

  • Illustrates excellent CSR – for large corporates there is almost a responsibility to take action against climate change, science-based targets are a way to do this.
  • Delivers a competitive advantage – helps your business to stand out in a crowded marketplace.
  • The whole company can be involved – you can engage both internal and external stakeholders to help your business achieve or even exceed your targets.
  • Provides Investor confidence – 52% of execs have seen investor confidence boosted by targets (sciencebasedtargets.org).
  • Increases innovation – 63% of company execs say science based targets drive innovation (sciencebasedtargets.org).

How do you set a science based target?

There are three science-based target (SBT) setting approaches:

  1. In a sector-based approach the global carbon budget is divided by sector and emission reductions allocated to individual companies based on its sector’s budget.
  2. With an absolute-based approach all companies will equally work towards the same percent reduction in absolute emissions.
  3. Economic-based approach – A carbon budget is equated to global GDP and a company’s share of emissions is determined by its gross profit, since the sum of all companies’ gross profits worldwide equate to global GDP.

How do businesses get involved?

For a business to get involved in the initiative there is a simple 4 step process to follow:

  1. Submit a letter to say you are committed to the scheme.
  2. Develop your own science-based target within 24 months.
  3. Submit your target for validation.
  4. Announce your target.

838 companies are currently taking science-based climate action and 343 companies have approved science-based targets.

How EIC can help

We can help you create science-based targets as part of a Carbon Management Plan that can also incorporate Net Zero goals. We’re already partnering with leading UK private and public sector organisations supporting them to transform their operations in line with ambitious targets that will help to save the planet and future-proof their business.

EIC can assist in meeting your science based targets by:

  • Establishing your carbon footprint to act as your baseline
  • Provide recommendations to reduce your carbon impact
  • Set your target to reduce your carbon footprint to meet the 5°C objective
  • Create an ongoing Carbon Management Plan
  • Create and publish all documentation required for the scheme
  • Work with you to embed the strategy into your business
  • Assist you with carbon offset strategies

We can also provide marketing packages for use both internally and externally, to assist with CSR around your targets.

Loose gas creating tight margins in the power market

Gas has led the way, particularly in the balance of winter contracts. These falls have come partly due to the very high levels of storage but also because of all the spare capacity that could be called upon if required. As a result, power prices have fallen due to the lower fuel cost.

LNG has been the main game changer with the deluge of tankers flooding in to Europe over the last year. Increased export capacity in the US and Russia has led to the increase in extra imports to Europe. It is also a symptom of the global oversupply in the worldwide market place. The liquid commodity markets and high import capacity make the UK an ideal location to offload any excess supply. LNG terminals are currently operating at 75% of their capacity, with all the extra gas being sold into the NBP pushing prices lower.

 

LNG imports graph

LNG imports graph

European imports have been virtually non-existent throughout the winter but more gas could be attracted through these pipes. There is a potential capacity of 94 MCM/d to come over the BBL and the Interconnector. To start attracting this gas the premium over TTF would firstly have to rise above the NBP entry charge of 1.56p/th and then cover the cost of using the pipelines. This means that if prices increase their premium over the continent to more than 2p/th additional gas will start coming to Britain.

 

IUK flows with Belgium
IUK flows with Belgium

 

Given the competition between supply sources, storage just cannot make it onto the grid, even on higher demand days, and this capacity overhang is weighing on prices.

 

Gas spare capacity graph

Gas spare capacity graph

However, the falls in prices for power have been less substantial and purely driven by the falling cost of fuel. Fundamentally the UK grid is seeing some of its tightest conditions in years. With nearly 3GW of coal capacity having retired in the last 12 months. The remaining coal units are now running as baseload and all flexibility is coming from gas. There remains spare capacity but this is the least efficient or most costly plant.

On windless, cold days we are seeing some stress on the system. Currently Monday, 18 November, has a negative margin with 300MW still required to meet anticipated demand. This has pushed power prices to their highest since February at £54.50MWh.

 

Power capacity graph
Power capacity graph

 

On Wednesday evening we saw the highest demand of the winter so far, of 45.2 GW. The above chart shows where generation was coming from at the peak on the left, with remaining output available for Monday on the right. While this shows the potential generation that could come on at the current price levels, it isn’t expected to on Monday, hence the negative margin.

So far Monday’s price reaction has been relatively muted, but it has occurred at a time when the gas systems oversupply is weighing heavily on the whole energy market. If it was happening amidst different market conditions the price outlook would be very different.

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Our Market Intelligence team keep a close eye on the energy markets and industry updates. For the timeliest updates you can find us on Twitter and LinkedIn.

How the clock change impacts UK energy demand

The clocks are scheduled to go back one hour this Sunday 27th October. The change will cause an obvious shift in usage of the electricity system as evenings draw in earlier in the day.

It also accelerates the seasonal trend towards higher demand during the colder, darker winter months, placing increased pressure on power margins. This can lead to spikes in electricity prices, should supplies struggle to meet the higher demand.

 

Jump in demand decreases as overall downward trend continues

As forecasts currently stand, the average peak demand for the week following the clock change will be 4.4% higher than the week before. Consumption is expected to rise by almost 2GW as lighting usage increases during the traditionally higher post-work demand period.

 

Average Weekday Peak Demand Weekly average before Clock Change (GW) Weekly average after Clock Change (GW) Difference (GW) Increase (%)
October 2019 (Forecast) 38.9 40.6 1.7 4.4%
October 2018 40.0 43.6 3.6 9.0%
October 2017 40.7 43.7 3 7.4%
October 2016 42.2 44.8 2.6 6.2%
October 2015 43.9 45.2 1.3 3.0%
October 2014 43.0 44.0 1 2.3%

 

However, the forecasted rise in average peak demand in 2019 is lower than in recent years. Notably 2018 which saw the highest percentage change, as consumption rose by almost 4GW week-on-week.

Overall peak power demand has been dampened marginally this year, with consumption after the clock change peaking at 40.6GW on average, 3GW lower than last year. This reduction can be attributed partly to half-term school holidays, which fall on the week either side of the clock change depending on school catchments. Higher renewable levels have also contributed to reductions in demand.

The ongoing trend in reduced energy consumption year-on-year continues, meaning that demand is rising from a far lower base. Improvements in energy efficiency have been helping to reduce electricity use over the last ten years. A large part of the reduction in peak demand has been the use of new technology, resulting in smart and more efficient appliances, able to do more with less.

Expected demand before this month’s clock change is 5GW lower than the highest peak in 2015. Furthermore, the forecasted post-clock change peak is the lowest on record.

 

Graph displaying electricity demand during the clock change

The role of renewables

The increase in wind and solar capacity in recent years has contributed to the overall demand reductions. Higher volumes of on-site renewable capacity allow more generation to be provided off-grid as homes and businesses generate their own electricity supply during windy or sunny spells. This reduces demand on the national transmission system. The high levels of solar availability during the summer season were a particularly strong influence on demand levels this year as on-site solar panels increased embedded generation. This reduced demand requirements for the transmission network.

Wind power continues to deliver a growing percentage of the UK electricity mix. By the end of September 2019, the UK’s fleet consists of over 10,000 wind turbines with a total installed capacity of over 21.5GW. Overall wind generation in the UK has so far been 33% higher through 2019 than over the same time period last year.

 

Graph showing monthly wind generation

What happens when there’s no wind?

While high winds have the capability of cutting power demand, one of the biggest dangers to the National Grid electricity network is a high demand scenario, at a time when wind output is very low.

Lighting has a bigger impact on electricity demand than heating, as the majority of home heating is gas-fired. However, during severe cold snaps, electricity demand does spike as additional heating is needed to cope with the very low temperatures. This scenario occurred during the Beast from the East cold snap in February last year. However, robust winds provided high levels of low cost electricity to the grid.

A lack of wind would see supply margins placed under significantly more stress during a similar cold snap this winter. This would require additional supply being provided by gas and coal plant or imports to make up for the increased demand. Such a scenario is likely to require significant price rises in the Within-day and Day-ahead markets.

The National Grid’s Winter Outlook for 2019/20 expects that there will be a sufficient supply margin to accommodate a wide range of security of supply scenarios. However, the organisation’s statistical 1-in-20 peak demand forecast predicts a demand of 499mcm/d, greater than the highest recorded gas demand. This is an unlikely scenario, but demonstrates how a period of high demand and low renewable availability could coincide to increase short-term prices.

An end to the clock change?

There have been proposals dating back to 2015, from members of the European Parliament, to end summer time observance. In September 2018 the European Commission proposed an end to seasonal clock changes, asking that member countries decide by March 2019 which time they would observe year round. The proposal was approved in March 2019, by 23 votes to 11. However, the start date has been postponed until 2021 to allow a smooth transition.

The United Kingdom is due to leave the EU before the reform becomes effective, meaning that it would be left to the government to make their own decision on observing summer/winter time. If continued, Northern Ireland would have a one-hour time difference for half the year with either the Republic of Ireland or the rest of the UK. The House of Lords launched an inquiry in July 2019 to consider the implications of this, with a call for evidence ongoing.

STAY INFORMED WITH EIC INSIGHTS

Our Market Intelligence team keep a close eye on the energy markets and industry updates. For the timeliest updates you can find us on Twitter and LinkedIn.

6 things to consider negotiating a flexible energy supply contract

In our latest blog we outline some key factors you need to consider when opting for a flexible energy supply contract.

  1. Contract Duration

    The duration of your flexible energy supply contract is often driven by market liquidity. The trading windows cover 4 seasons (24 months) for power and 6 seasons (36 months) for gas but it’s always beneficial to put a longer term contract in place so seasons can be traded as soon as they become liquid. Longer duration flexible energy contracts provide optimum trading opportunities to manage prices over time. It is also worth ensuring a supply contract is in place to cover any duration that requires a budget to be set.

  2. Non-Commodity Charges

    It’s important to think carefully about your non-commodity costs when securing your flexible energy supply contract. There are many options available. These range from fully fixing all or some non-commodity charges, to having all charges fully passed through at cost. Having all, or at least some, of the demand related charges passed through will reduce premiums. As a result you can reduce costs by load shifting or load shedding. This will however increase the complexity of invoices as the non-commodity charges will be transparent on your invoices with some subject to reconciliations. Non-commodity costs will make up around 67% of your overall costs by 2025. So it’s vital to consider your wider energy strategy as fixing non-commodity costs could limit the potential gains from being more proactive.

  3. Trading Flexibility

    Although the commodity element of your costs now makes up a smaller portion of overall spend, this is the element we can influence the most through active trading. Access to supplier trading desks, the ability to refloat volume and the size of tradeable clips are some of the things that should be considered to maximise trading flexibility. Some suppliers will also charge trading transaction fees which can result in additional costs over the duration of the contract so these should be factored into supply contract negotiations. Your preferred trading strategy should also be considered to ensure you’re your contract offers you the required level of flexibility.

  4. Volumes

    When tendering a flexible energy supply contract, including accurate volume forecasts will enable a supplier to provide the most suitable contract offer. Some suppliers will apply a volume tolerance to a supply contract and set limits on reforecasting. So if there are any planned or known volume changes due occur in the future it is important to consider these. Having accurate trading volumes in place from the start also enables effective buying strategies to be implement from a trading and budgeting point of view.

  5. Administration

    When choosing a supplier to renew with it is important to consider your requirements relating to payment terms, invoicing and data access. Some suppliers can be more flexible than others regarding invoicing and payment terms, and certain factors such as credit can impact on the options available. There are also variations in what a supplier can offer in terms of data access. Whether this is access to consumption data or invoices via a dedicated contact or via an online portal.

  6. Negotiation & Analysis

    Suppliers will charge specific fees for managing a contract and offer different premiums for renewable energy for example. Therefore it’s vital to analyse supplier offers on a like-for-like basis to ensure you secure the most competitive contract available. Tender negotiations should consider all aspects of a supply contract to achieve the best contract terms in line with your requirements. The main aim is to procure a competitive contract with a supplier that meets all of your day to day needs whilst offering trading flexibility to suit your strategy.

 

Click here to find out how our Flexible Energy Procurement solutions can transform your electricity and gas buying strategies.

Triads – how low can they go?

The Triad season started on 1 November and is one of the most important areas of demand management for energy users. Triads are used by National Grid to calculate transmission charges as part of the Transmission Network Use of System (TNUoS) scheme.

What are Triads?

Triads are the three half-hour periods with the highest demand between 1 November and the end of February, identified by National Grid. However, each Triad must be separated by at least 10 clear days, meaning consecutive days of high demand won’t result in multiple Triads.

 

Why should you avoid them?

The knowledge of when Triads will occur enables many companies to manage their demand consumption. If your electricity contract allows for it, reducing your usage during an expected Triad period will result in reduced transmission charges and lower bills.

 

How low can they go?

The 2017/18 season saw the lowest level of Triad demand since records began in the early 1990s.

The maximum Triad level dropped to a record 48GW last year, having fallen more than 10GW in just eight years.

 

Overall energy consumption has been trending lower for the last decade, and one of the interesting outcomes from this Triad season will be whether a new record low can be achieved.

 

Efficiency is key

A large part of the reduction in peak demand has been due to major developments in energy efficiency. The use of new technology and appliances, as well as a switch from incandescent lighting, are all contributing to lower energy consumption.

The act of Triad avoidance has developed to the extent that it’s influencing when Triads occur, as more and more businesses across the UK look to demand side management as a means to cut their costs. National Grid highlighted last year that businesses reacting to warning signals – such as our Triad Alerts – had the potential to cut the country’s peak demand by as much as 2GW. This then makes it more difficult to predict Triads, as peaks for the winter get lower and flatter with each passing year, forcing us to adapt our model to ensure continued success.

 

Our successful track record

Forecasting Triads is dependent on a wide range of different factors. Our Triad Alert service monitors different influencers to predict the likelihood of any particular day being a Triad and automatically sends that information promptly to our clients. These businesses can then take informed action to avoid high energy usage during these more costly half-hour periods, while minimising disruption to their everyday activity. Our daily report can help you plan ahead with an overview of the next 14 days, alongside a long-term winter outlook.

Of course, calling an alert every weekday would generate a 100% success rate, but we recognise the negative impact this would have on businesses. Organisations could incur major damage to revenues if required to turn down their production each day for four months ‘just in case’, so we aim to provide as few alerts as possible.

In the previous Triad season we only called 9 Red Alerts and successfully predicted all three Triads with fewer alerts than any other tracked TPI or supplier. In fact, the total number of alerts called by Utilitywise has fallen 36% in the last three years. We successfully predicted all three half hour periods with our lowest ever number of alerts. Our in-house model is based on a traffic light system, with Red Alerts indicating we believe a Triad is highly likely and our clients should take immediate action.

For those that took action last year, based on our advice, demand was cut by an average of 14% compared to standard winter peak-period half-hour consumption. This resulted in significant average cost savings of over £30,000, and in some cases, rewards closer to £700,000 were observed.

 

Intelligent buildings, smarter business

By forecasting when Triads will occur, we empower our clients to take control of their consumption to reduce their energy use and lower their bills. Businesses can react to our Alerts simply by cutting demand during suspected Triad times or by load-shifting.

Load-shifting involves moving the most energy-intensive tasks of the day to a time when it’s less likely that a Triad will occur, for example early in the morning. This enables you to avoid Triads without reducing your overall daily energy use. Building controls make this easier. With our IoT-enabled Building Energy Management solution, we’re introducing the next generation of smart building controls. Our innovative solution brings together the required technologies to integrate your critical energy systems with a single, remotely-managed platform. This means you can manage your buildings in real-time.

A new era for energy and building management

The building management industry is on a path to converge with IT and, with the rise of the Internet of Things (IoT), a world of opportunities has opened up.

How many of us used Uber to order a taxi, or Air BnB to book accommodation five years ago? New technology isn’t only disrupting the way we live, but also the way we work. In fact, 76% of businesses believe that IoT is critical to their future success.

At EIC the aim is to help businesses reduce their utilities consumption and energy-related costs. And, as IoT connects ever more devices, we’re using cutting-edge solutions to revolutionise how you run your business. In short, thanks to IoT, traditional building management systems (BMS) as we know them are a thing of the past. There’s never been a better time to upgrade your energy management strategy – but how?

We want to transform the way you control, monitor, meter, and manage your energy and water usage, as well as your sites’ critical business systems. To do this, we’ve teamed up with leading tech giants O2 and Intel to launch our IoT-enabled Building Energy Management solution. The partnership unites the technologies needed to integrate a businesses’ critical energy systems with a single, remotely-managed platform. With instant access to actionable data insights, buildings can be managed in real-time.

Through our smart controls solution, you’ll have the power to implement, amend, and manage control strategies on a wide portfolio of sites from the single touch of a button.

 

Together, through IoT controls, we can provide you with; 

  • Full integration. View, manage, and control your energy consumption and your buildings’ critical business systems in one place with a cohesive, joined-up strategy that includes energy, water, security, heating, lighting, access control systems, and point of sale.
  • Real-time data. Access your building’s data 24/7/365, anytime and anywhere, from desktop to smartphone.
  • Actionable insights. Transform your utilities data into useable information, helping reduce your energy consumption, improve energy efficiency, and better control your costs.
  • Simple and quick implementation with minimal disruption. We can set up our equipment in minutes and there’s no need to re-wire. In fact, once we’re set up you can turn off your old systems. 
  • Valuable savings. Cut your operating costs by up to 20%, even on your most efficient buildings. ROI for our solution is typically under 12 months, in an industry where up to five-year paybacks are commonplace.
  • A truly bespoke solution. We can design a platform to connect, configure, and control what you need, specific to your business strategy and requirements.

 

By giving business owners and building managers unprecedented insight into how their buildings are using energy, they can make truly informed decisions about how to reduce their utility bills. Our IoT controls solution will leave you with intelligent buildings and a smarter business, giving you the potential to unlock huge savings, freeing up cash to be invested elsewhere.

For a taster of what our Building Energy Management solution can do for you, download our brochure and start your journey to a better-connected future.