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Managing Climate Risks and Costs as the Heatwave Impacts on Energy Demand

An unseasonal surge in demand for electricity across the UK highlights the impact that climate change can have on a business, driven in part by a rise in the use of air conditioning. Here, we outline how rising temperatures are impacting on the UK’s energy grid, as well what this means for UK businesses in terms of managing energy costs and ensuring resilience of power supply. 

This week saw the news that the UK’s 46-day run without the use of coal power has come to an end. Historically, crunch periods for balancing energy supply with demand fall during the winter months. This time around the culprit is something very different: the first heatwave of the year, which drove temperatures above 30C for much of the UK.  

To ensure that a surge in demand caused by air conditioning was able to be met, National Grid ESO requested that Uniper bring Ratcliffe-on-Soar coal-fired plant online to shore up supply. The question now is if rising temperatures in the UK could change our pattern of annual energy demands.  

The Growth of Air Conditioning 

Meteorologists now put the chance of the UK experiencing a hot summer at 45%, 2.3 times the usual likelihood. While there is no indication that we will return to the record-breaking 40C temperatures seen last year, heatwaves are becoming demonstrably more frequent. Over the past decade, the average temperature in the UK has been 0.8C warmer than the average before 1990. 

One impact of this has been a surge in the popularity of air conditioning, both for commercial and domestic use. Globally, air conditioning accounts for around a fifth of the total energy use in buildings. In the UK, air conditioning has typically been used infrequently, particularly domestically. This is starting to change, with a government report on cooling in the UK forecasting a 15% rise in the UK’s power consumption during the summer months due to air conditioning demand. 

The IEA has identified air conditioning as a key driver of global electricity demand growth. By 2050, a tripling of currently deployed air conditioning units will require new electricity demand equivalent to the combined current demand of the USA, Japan and the European Union. 

Balancing the Grid During the Summer 

As is often the case, the crunch period that led to National Grid requesting coal-fired generation to be brought online has no single driver. While a spike in air conditioning use has pushed up demand, it coincided with a slump in wind generation and a fault in the North Sea Link Connector, cutting imported electricity from Norway by half. 

Weather conditions impacting grid supply during the summer are broadly like those during the winter, if somewhat inverted. During the winter, peak periods fall during the early evening, when the sun sets and solar demand slumps. In the summer, if peak demand starts to come during heatwaves, it will likely (but not always) come at a time when wind generation is relatively low. 

The electricity demand brought by air conditioning is just one factor that is set to ramp up electricity demand in the UK over the coming decade. The electrification of heat and transport will also play a major role, further complicating the already difficult task of decarbonising the UK’s energy mix and switching to a renewable-based system. 

Considering Climate Resilience 

The IEA have described the issue as a vicious cycle: as carbon emissions drive up temperatures, demand for air conditioning increases, further boosting carbon emissions. For UK businesses, it is another symptom of an area that increasingly could negatively impact on productivity and profitability if not addressed: climate resilience. For the typical UK or EU business, an extreme heat event translates directly to a 0.63% reduction in annual sales and a slump in profit margin of 0.16% for every degree above 25C the temperature reaches. 

A third of British companies have already taken steps to protect themselves from the impact of a changing climate. 30% have spent at least £100,000 in doing so. 10% have spent over £1 million, demonstrating how seriously many are taking the threat. Solutions include committing to reducing carbon emissions as part of a plan reach net zero, overhauling distribution chains and procurement and investing in more environmentally friendly technologies. 

Managing energy and sustainability is a key aspect of climate resilience for businesses. Climate-related power disruption is a growing risk, while increases to operating costs and lost potential revenue means that reducing energy bills while making a positive contribution to your business’s carbon commitments is vital.  

Powerstar technologies can help to protect your site from climate-related power disruption, which steadily increases in the face of extreme weather events. Damage to distribution networks, constrained grids and disruption to distributed generation can all impact on your site’s access to reliable power. A battery energy storage system helps protect your site by providing emergency power in the event of disruption, while also bolstering carbon reduction efforts. 

As the impact of the climate crisis on UK businesses becomes increasingly apparent, ensuring your organisation has a robust carbon reduction strategy in place and can keep pace with steadily increasingly legislative requirements is equally vital. With technologies such as voltage optimisation, this can be achieved by bolstering energy efficiency across a site, while also providing a substantial saving on energy costs.