A bad situation became altogether worse at the start of this year. Economic uncertainty was already part of the picture in which the energy and utilities market had to operate. A declining workforce and competition for new recruits was com-pounded by the two-year Covid lockdown.
That at least helped boost interest in the virtues of greater automation and digitalisation, as well as encouraging more investment of thought and money into renewable forms and clean energy. Yet there was a more immediate concern over existing supplies of traditional energy sources as the world returned to work as lockdowns eased and global demand began to rise.
And then the crisis in Eastern Europe erupted. The Ukraine invasion led predictably to the weaponisation of energy supplies by Moscow. Not a direct problem for the United Kingdom which relies on Russia for a piffling three to four per cent of its natural gas. Pretty soon though it became an indirect one, as continental Europe, which depends on its neighbour for more than a third of its supply, began competing more intensely for supplies elsewhere.
This was further bad news for the UK, already facing pressures on domestic user prices. As the House of Commons Library Domestic Energy Prices report published in mid-May reminded us, although electricity prices increased, gas prices had been stable or even fallen for much of the period from 2013–2020.
The UK’s green transition will only be able to take place through a series of incremental changes. Making minor switches such as these in the short-term can deliver exponential returns in the long run
Chris Rason, MD, Aggreko Northern Europe
Then, in the second half of 2021, Government began progressively loosening the energy price cap. In October that year it increased by 12 per cent. Worse was to come the following April, as the cap increased by 54 per cent to herald the start of the 2022/23 financial year, with further rises due this October.
“Higher wholesale prices, especially after Russia invaded Ukraine, have led some to speculate that the cap could increase by a further 30-50 per cent in October 2022,” said the report.
While focus has been very much on the consumer, for UK industry the problem has been a constant, given that business energy usage does not have the benefit of a price cap.
As for the Government’s recently-announced Energy Security Strategy, from the perspective of the established utility and energy sector it represents something of a curate’s egg – good in parts.
Long-term of course (even if deadlines have been brought forward post-COP26) the thrust is decarbonisation and renewables with the aim of meeting 2050’s net zero carbon targets.
In addition to wind and solar, nuclear energy receives a notable boost with the commitment to consider building up to eight new reactors. And, while the controversy once engendered by nuclear, has not gone away it has subsided markedly since the Cold War era. By contrast, the commitment to issue more North Sea oil and gas licences or hints of reconsidering shale exploration are still likely to attract flak from environmentalists.
Then of course, there are those relative newcomers: hydrogen production, including green hydrogen, planned to double by the decade’s end; and heat pump technology, spurred by multimillion pound state investment in manufacturing competitions and domestic user subsidy.
That may mean a lengthy period of recalibration by the established suppliers and manufacturers, but as the transformation of the Danish multinational DONG Energy into Ørsted has demonstrated, leading players are energy source-agnostic; interested in the most viable, as measured in terms of cost, efficiency, scalability and social acceptability.
The bottom line is that energy efficiency is good for business and good for the environment
Tarak Mehta, president, ABB Motion
So, energy leaders must operate in a state of flux, but the challenge is greater down the process industry ladder, where firms must work within parameters they cannot influence. For many, socially conscious agreements made at the top levels of government or business bring an unwelcome hint of more cost and less margin.
Yet, argued ABB Motion president Tarak Mehta, acceleration in such investment is a business gain.
“It is vital to help stakeholders across industry understand that Net Zero need not mean net cost. Both suppliers and governments have a role to play in promoting the message that adopting energy efficient technology offers a fast return on investment while cutting CO2 emissions. The bottom line is that energy efficiency is good for business and good for the environment,” said Mehta recently.
His company’s Energy Efficiency Investment Survey of more than 2,000 companies worldwide reveals that, on average, respondents spent close to a quarter of yearly operating costs on energy usage, with more than half describing that as a substantial profitability threat.
Being in control
However, one in two respondents state their greatest caveats against making improvements relate to cost, while more than one in three fear the effects of downtime should they attempt to address the issue.
And yet pointed out Mehta, the key driver of success cited by the International Energy Agency is not the adoption of innovative methods and new resources but more efficient use of their existing energy.
Commented Mehta: “Energy efficiency is identified by the IEA as the ‘first fuel’ as it makes the most of existing energy and avoids the need to develop new resources… if the world’s 300 million industrial motor-driven systems were replaced with optimised, high-efficiency equipment, global electricity consumption could be reduced by 10 per cent.”
To put it in perspective, such a reduction equates to more than 90 per cent of the entire EU’s annual consumption, he pointed out.
Likewise, director of sales and marketing for Smarter Technologies Group Matthew Margetts is adamant that, with all suppliers faced with wholesale price rises themselves, “your energy cost saving tactics need to come from within the business”.
“Gas and power prices have increased to unprecedented levels, creating a challenging operating environment for every business and consumer,” states Margetts. “In this climate, companies need to look at the controllable factors – in this case, monitoring, reducing and optimising energy consumption.”
A starting point is to address that energy consumption, he advises. Reducing wasted energy can cut consumption by nearly a third and adoption of smart building technology opens a door to connected solutions that can pinpoint the location of such waste.
“In addition, pre-defined automations can ensure that energy is only being used when it is needed. Smart building systems can be retrofitted to existing buildings, which means they are within reach without moving or building new premises.”
Connecting to energy management systems provides actionable insights on data and minimises dependence on manual reports, while energy optimisation technology can control a building’s energy use based on the real-time carbon intensity of the grid.
Central government funding from the Department for Business, Energy and Industrial Strategy (BEIS), via the Industrial Energy Efficiency Accelerator (IEEA) programme managed by the Carbon Trust is also reaping some results.
Scottish technology company Innovatium has unveiled what it claims is a serious challenger to traditional compressed air technologies. Collaborating with Birmingham University to develop its PRISMA (Peak Reduction by Integrated Storage and Management of Air) system, the firm claims early data provides energy savings of up to 25 per cent and hours of back-up energy storage.
It has now been placed on site at Aggregate Industries’ Cauldon Cement Works in Staffordshire for the first deployment in a ‘live’ environment, storing energy in liquid air form to provide compressed air, allowing for compressors to be turned off.
Aggregate Industries’ sustainability director Kirstin McCarthy comments: “We believe PRISMA can play a major role in addressing the ‘energy trilemma’ of managing energy efficiency, energy cost and energy security, and we’re confident that its installation at Cauldon will further prove its decarbonisation credentials.”
Global temporary power company Aggreko’s new emissions calculator displays percentage reductions in emissions and fuel consumption – with savings in carbon dioxide, nitrous oxides, particulate matter and fuel – to be made by switching to greener alternatives for power generation, based on clients’ unique energy demands.
Aggreko Northern Europe MD Chris Rason states: “Processes within this sector can prove particularly energy-intensive, so finding an effective substitute for current power generation techniques can often be challenging.
“The UK’s green transition will only be able to take place through a series of incremental changes. Making minor switches such as these in the short-term can deliver exponential returns in the long run.”
Similarly, back at ABB, its Ability Digital Powertrain Energy Appraisal service draws on data measured from fleets of digitally connected electric motors and variable speed drives to show where and how much energy can be saved by upgrading to high-efficiency technologies that reduce operating costs and CO2 emissions and thus pinpoint investment priorities.
Such innovations are crucial to transition but as Make UK CEO Stephen Phipson recently summarised: “Smaller companies are desperate to implement low carbon measures but have their hands tied by the current costs. “The manufacturing industry has a key role to play in this transition and is ready to go. But it will need support to unlock its full potential and clear all the barriers to allow it to invest in switching to clean energy sources.”