Over the previous three years, it proved impossible to consider any aspect of the process industry landscape without a nod to the likely and present effects of the UK’s withdrawal from Europe.
It’s safe to assume that a similar period and more besides will now be spent factoring in the Covid-19 effect.
To begin with, in a matter of weeks, the effect of lockdown has been to seriously deplete power demand. KPMG head of energy and natural resources Simon Virley put the level at 15% below what would normally be expected for this time of year.
Confinement worldwide has seen an overall drop in oil demand, which the IEA Oil Market Report estimated at its lowest since 1995. The stricter the confinement, the worse the effects: the UK’s 12% year on year drop might look bad yet pales against Italy’s 25% fall. Meanwhile, in the USA, oil refineries are reaching full capacity.
Like all industries, the energy sector is set to experience a reduced workforce during the Coronavirus crisis. Throughout this period, technology can be exploited to lessen the engineering burden
Martyn Williams, UK managing director, COPA-DATA
Oil values in particular were already plunging thanks to geopolitical pressures but helped further by confinement and the consequent hollowing out of the travel industry and much economic activity. Unsurprisingly, firms have slashed capital spending by a quarter and a drop in value has rendered much upstream activity simply uneconomical for the time being.
The more pressing issue though is not the immediate effects upon the energy sector but the question of how these will play out in terms of shaping it long term.
Until the point where the pandemic began to impact at a macro economic level, the energy sector was confronting several stark but clear issues: transitioning from fossil fuels to renewables; securing supply whether at home or abroad; ensuring a sufficient and skilled workforce; and harnessing digitalisation and automation for greater process efficiency.
Now there are other factors to consider that need to shape companies’ strategic approaches, namely:
- How will the economic implications of Coronavirus impact industrial demand on energy and utilities?
- Will the impact of the pandemic prove a brake or an accelerator for energy transition?
- Can the temporary reduction in the workforce prompt more speedy investment digitalisation and automation?
- Is the move towards Industry 4.0 adequately supported by public policy and structural changes in the utilities market?
Martyn Williams, UK managing director of energy grid software provider, COPA-DATA has little doubt that the growth in remote working and furloughing increases the value of technology that reduces dependence on humans.
“Like all industries, the energy sector is set to experience a reduced workforce during the Coronavirus crisis. Throughout this period, technology can be exploited to lessen the engineering burden.”
He cites the case of COPA-DATA’s energy grid software, zenon, which can be used to automate otherwise manual processes at substations to varying degrees.
“The technology can be deployed to achieve completely unmanned operations, or to provide on-site operators with a user interface to deliver data and make the process of overseeing substation operations much simpler.”
Yet one should not underestimate the challenge this may involve when transformation must integrate with legacy assets and accepted practices, he cautions.
“Structural changes for the UK’s energy sector can be complex. For example, integrating new control software... could require installation at multiple sites which, due to the age of the country’s infrastructure, will use hardware from various manufacturers on a variety of communication standards,” states Williams.
“Because of this complexity, implementing new technology must be done in an incremental and scalable way.”
Historical precedent, of course, suggests that pandemic events frequently have a transformative effect overall on working practices and the adoption rate for new technologies.
But the reality for the individual enterprise is likely to be more nuanced. A small firm operating on tight margins or a larger one that has to take in to account legacy assets and a large but inappropriately skilled workforce may be forced to prioritise immediate survival and cost control over investment in innovation.
The two however are not always opposed. Condition based maintenance can help keep critical assets in effective condition. The trick is to re-evaluate precisely which of your assets are the most critical, advises Frederic Thomas, MD of AVT Reliability [pictured].
“Most breakdowns happen when you’re least prepared to deal with them. Production might be at maximum capacity; it is a weekend or evening; there are no spares on the shelves; or not enough staff available to deal with the problem. Occasionally they even combine to create a ‘perfect storm’ scenario, which many industries are currently facing.”
Digital technology mitigates the risk of potentially catastrophic stoppages, using predictive technology such as vibration analysis, thermal imaging, oil sampling or ultrasound to identify existing failure modes and act on them before they provide the catalyst for failure.
“The deep insight this offers into the condition of equipment at any given time enables reliability managers to identify problems when they are on the horizon rather than at the door,” Thomas states.
Even firms reluctant to embrace technological change accept that predictive technologies could mitigate the risk of equipment failure and unscheduled downtime. Thus, says Thomas, most have a condition monitoring programme in place for assets which are considered critical to ongoing production – accounting for, on average, around 10% of a plant.
In recent years, driven by the growing affordability and availability, switching away from fossil fuels to renewables has become more straightforward
Shylesh Muralidharan, director of product management, energy & sustainability services, ENGIE Impact
But the game changer in the energy sphere has been the triple whammy against fossil sources and refined product: political pressure to embrace renewable sources; a glut of supply that means storage and extraction outstrips the value of a barrel of oil; plus reduced demand emanating from the lockdown. “In recent years, driven by the growing affordability and availability, switching away from fossil fuels to renewables has become more straightforward. Today, renewables produce more than 20% of the UK’s electricity, and that figure is forecast to rise to 30% by 2030,” says Shylesh Muralidharan, ENGIE Impact director of product management, energy and sustainability services.
“This represents a clear, new market opportunity for utility and renewable providers and developers, and it’s also one for businesses. However, there are still barriers that exist for companies looking to integrate renewables – it requires a different approach and strategy to procurement than many will currently have in place.”
This spring recorded the longest period for the generation of electricity in the UK without coal since records began, with renewables accounting for well over a third of sources in this timeframe. But with wind and solar supply in particular being variable, the challenge will be for the National Grid to either increase capacity or, says COPA-DATA’s Williams, become more flexible in its responses.
Agility equals longevity
“The grid must become more flexible to demand changes, while also managing the greater reliance on renewable power. When demand spikes unexpectedly, it is vital that renewable energy can be balanced on the grid,” he insists.
“Therefore, Distributed Energy Resource Management Systems (DERMS) will become essential. These platforms can forecast, monitor, control and coordinate energy from renewable sources — for the grid, this means when demand spikes unexpectedly, we do not always need to turn to fossil fuels for power.”
Reliability of supply and economically-sustainable scalability are central to the development of renewables. Variations on the lithium ion battery are pushing the technological boundaries, while energy storage facilities are becoming more ambitious and better regulated.
A key component in embedding storage within the energy system is artificial intelligence (AI). Alexander Ritschel, head of technology for Masdar, addressing the issue at the World Future Energy Summit report put it thus: “AI has the potential to accelerate sustainable development in many different ways… [it] can support applications such as battery storage which are helping to integrate variable power sources such as wind and solar more effectively into our electricity grids.
“Virtual power plants running on AI algorithms are emerging and can improve energy access and electricity trading. AI also promises major advances in energy efficiency by making our cities in particular much more responsive to the way we consume power.”
But hydrogen exploitation offers perhaps the greatest potential for reprising the UK energy model, addressing simultaneously the questions of transition, security of supply and storage.
The North West of England’s HyNet is perhaps the most advanced hydrogen and carbon capture, utilisation and storage (CCUS) project in the UK, aiming to blend hydrogen into the gas grid, supported by £1.6 million in grant funding.
Dave Parkin, director of Hynet’s co-founder Progressive Energy is forthright: “To achieve our national target of Net Zero emissions by 2050 it is essential that we develop a hydrogen economy in the UK.”
Ed Syson, chief safety and strategy officer of project partner Cadent describes the venture as “a massive step in the UK’s journey to Net Zero”, powering industrial processes in a way that would not be achievable through green electricity alone.
“We need a true energy mix to be sustainable – and to be realistic in opting for a future that takes advantage of multiple clean energy sources, like hydrogen, to get us to Net Zero.”
Meanwhile, Hynet’s third founder Peel Environmental is planning to open the UK’s first waste plastic to hydrogen facility next year at the 54-hectare Protos site near Ellesmere Port, using pioneering Distributed Modular Generation technology developed by PowerHouse Energy Group to harness up to 35 tonnes of unrecyclable plastics a day as a local source of hydrogen. It will also generate electricity for commercial users via a microgrid in a ‘closed loop’ solution.