The past 12 months has been a time of tremendous change for the UK energy sector: competition between suppliers and new entrants to a marketplace fraught with risk has made for some interesting viewing, coupled with lots of regulatory changes, new challenges and new technology.
However, despite all of this, and the fact that the industry is regularly used as a political football, Chris Russell, managing director at renewable energy supplier Tonik Energy, believes there are some key themes emerging when it comes to renewables, which not only represent real challenge – but also present some amazing opportunities for the energy market in 2019.
The end of the Feed-In Tariff (FiT)
Since 2015, the UK government has stated its intention to remove the payment for small-scale renewables and April 2019 will see the end of payments to generators, and that generators – normally small households – would need to ‘go to market’ to get the value that they are delivering to the system. Not a wholly practical solution for those who have utilised this initiative over the past few years as a way of saving on their energy bills.
From April, a home generator will have to go to market and set up a power purchase agreement (PPA) and effectively be subjected to the same measures as a large offshore wind farm or commercial solar farm in order to get paid for their electricity. The process is not straightforward either.
While efforts from the Solar Trade Association – something that Tonik Energy supported as a business – managed to change the opinions of the regulator and get them to go back to the drawing board, the ROI for solar post-FiT will be small, so finding a way to make export work will be critical to the continued success of the sector.
Projects focused on the levelised cost of energy (LCOE) are looking like solar will be in the GBP 50-60 range - competitive with offshore wind so this at least looks promising.
The lack of clarification provided by our policy-setters also means the future of classic rooftop solar power looks uncertain, but this is likely to be one technology that will just keep going from strength-to-strength.
The rise of intelligent tech
We expect the Tesla Powerwall to really make an impact in the UK marketplace in 2019. Since Tesla launched the product we have been awaiting to see its potential be fulfilled, but we think next year will be pivotal in the role of energy storage for UK homes and businesses.
With new technologies, new business models and some interesting announcements, the signs are promising for the storage market and with the regulator taking some much needed (and long-overdue) steps to reduce the confusion around how a residential battery can be installed in a ‘compliant’ manner, we only expect this method of storage to become more popular over time.
Electric vehicles becoming even more mainstream
Electric vehicle (EVs) sales in the UK have risen dramatically over the past few years. For example, there were just 500 EVs registered per month in the first half of 2014. In the past year alone, we have seen more than 4,800 registrations a month. The plug-in car market now makes up 4.2%t of all new cars sold in the UK and with the National Grid having recently doubled its growth forecast of EV uptake out to 2050 - this looks to be just the start.
Though the cost of running an EV looks set to achieve parity with traditional combustion vehicles in 2024, we expect to see significant moves in this area of the market before then - particularly with the introduction of some new policy initiatives.
“The Automated and Electric Vehicles Act”, for example, aims to help facilitate upgrades to motorway services areas and allow regional governments to request installations at petrol stations in their areas, in order to cope with the increased EV driver demand. And, with recent moves from big energy players like Shell and BP into the sector, and new names popping up almost weekly announcing a new partnership or network rollout, it is becoming a fiercely competitive field.
One of the common barriers to entry for potential EV drivers is the need to be a member, require a specific card and have to worry about a pump being available when looking to charge their vehicle.
2019 will undoubtedly be the year we will see a big inflection on EV charger availability and we believe some of the issues and confusion customers have previously faced will begin to be challenged.
With consumers becoming even more aware about their actions on the environment, the prominence of renewables and new technology in this space will only continue to rise in 2019 - watch this space!
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