Time to switch on to switching off

Birmingham, UK – UK industry is facing a ‘perfect storm’ of carbon taxes, the closure of many power plants to meet emission rules, the cost of investment in new nuclear and renewables plants, and rising global competition for energy resources, particularly gas.

As these converging trends will make many fuels harder to source and energy even harder to pay for, the only real protection for process plant operators is to get a lot smarter in how and when it uses energy.

Participation in capacity mechanisms, with customers – for example, reducing demand at times when its very cold – has always been a feature of the energy market, notes Mark Callaway, energy markets director at Power Efficiency – a company which was recently acquired by Balfour Beatty

“For an energy specialist with an industrial background, it is absolute ‘bread and butter’ to look at when a facility can reduce its consumption or start up standby generation to get extra payments and make savings on their energy costs,” said Callaway. 

“But five years ago, if you asked many customers to reduce demand, at say 5.50pm, they would insist ‘No we cannot switch on our generator at that time’, and give you six reasons why they couldn’t do it,” added Callaway – addressing a conference at recent The Energy Event in Birmingham.

Now, he said, the mentality is changing and people are really seeking to take steps to reduce energy costs. “They are talking about things like interruptible gas contracts, demand-side response and triad avoidance, with a ‘can-do’ attitude.”

Callaway went on to forecast that within 10 years, with a more complex generation system in place, the incentives for this and the costs of not doing it would be significantly higher.

A sliver of good news is that industry efforts to reduce energy consumption are likely to receive some financial reward under the government’s Electricity Market Reform proposals.

“It is absolutely important that we have first as much energy efficiency as we can get, but secondly that we turn down the demand for electricity, rather than just always building more iron in the ground,” said Richard Sargeant, head of energy futures at the DECC.

“Demand side will be rewarded on a level playing field with the supply side,” Sargeant promised at the Birmingham conference. “That will be factored in within the EMR.”