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This Month in Energy – February

Powerstar’s new CEO Solon Mardapittas examines the fallout from the announcement of a new energy price cap, as well as explaining how the rapid rate of innovation in energy technology is opening new options for business.

Rising Bills

Despite Falling Wholesale Prices Many in the energy industry, including Powerstar last month, have warned that a slump in wholesale gas prices is unlikely to have a meaningful impact on energy bills. In practice, the change in support mechanism for both domestic and business customers will increase energy costs from the start of April.

This has been brought into much sharper focus following the announcement this week of a new domestic energy cap. Despite a fall of nearly £1,000 in the total cap, a reduction in support means that a 23% decrease in bills becomes a 12% increase in real terms. A real Energy Crisis for many businesses. The backlash following these figures being widely reported means that there is growing pressure on the Government to extend support for domestic energy users.

Businesses face a similar increase, but as with last Autumn before energy bill support was first introduced, support for business is at risk of being overlooked.

Innovation and Net Zero

While the energy crisis has focused much of the market’s attention on immediate energy cost pressures, in some ways it has delivered a boost for sustainability. The cost of energy has seen a major push by the private sector to decarbonise, with energy efficiency key to reducing both costs and associated carbon emissions.

However, the scale of the challenge the UK has set for itself to reach net zero by 2050 is a daunting one. In particular, it will be extremely challenging to replace some uses of fossil fuels with cleaner alternatives. One example arose this week with a report by the Royal Society illustrated that there is no clear alternative to jet fuel in aviation. With the current level of flying, half of the UK’s agricultural land would be needed to meet demand if it were replaced by biofuel.

The speed of innovation in the energy sector means that new solutions are emerging all the time. While many are still in the early stages, new technologies are coming to the market at exceptional speed. The greenification of gas is one area, with over 80 biomethane plants now connected to the grid in the UK. Hydrogen is another alternative fuel with huge potential, with the UK committing to 10GW of hydrogen production capacity by 2030 and a new certification scheme introduced this month to verify the sustainability of hydrogen production.

Microgrids

One area that is seeing increasing private and public demand is microgrids, driven by energy cost uncertainty and the desire to decarbonise. With ongoing concerns over both the volatility of wholesale energy markets and the stability of aging grid infrastructure, a microgrid allows a site to insulate itself from issues on the wider network. At Powerstar we are also seeing a growing number of customers turning to microgrids as a solution to complex electrical infrastructure headaches.

This includes a railway site that was struggling to support fast-charging rail for trains due to a weak grid supply. Resolving this conventionally would require at best a costly increase to agreed supply

capacity, or more likely expensive new connection works. Existing stresses on distribution networks often means that requests like this are turned down outright by a site’s DNO.

Instead, a microgrid allows charging of trains to be conducted without connecting directly to the site’s grid supply, using the battery as a buffer to prevent additional strain on the distribution network. Extensive solar generation on the site can also be used more efficiently, being stored in a BESS to be used when a train connects to the fast-charging rails.