Moving away from the centre ground – why decentralising energy is key for the future of the UK

The current predicament

A real lack of investment in the UK’s power infrastructure over many years - and successive governments - has landed this country in a potentially disastrous predicament with a predicted 1.2% energy capacity margin this winter. This means that the lights could literally go out on thousands of households and businesses if just one major energy provider goes down.

North Sea fuel supply is rapidly declining too, which is driving up competition and costs among suppliers – costs which will inevitably be passed on to businesses and homeowners. This shift will see more and more people enter fuel poverty, where they are unable to afford to keep their property adequately heated. 

The Electricity Reform Act does provide some hope but only if it is brought in to attract investment and provide adequate financial support. Too frequently have government reforms been championed, only for funding and support to be pulled when targets are in danger of being met.

The fact that we are facing this problem which could so easily be avoided is completely absurd, and the whole way in which this country generates and distributes its energy needs a complete overhaul.  It is high time that businesses and government started to take action to stem the problem of how to generate and distribute energy efficiently.

The implications for business

For large scale energy users  such as industrial and manufacturing businesses, reliance on the National Grid means potentially catastrophic results if capacity runs low; many are signed up to interruptible contracts that stipulate they must stop production if power supplies dip below a certain point, forcing them to slow their operations and thereby weakening their contribution to the UK’s economy. What’s more, these businesses are often located miles away from energy sources meaning an incredibly inefficient transfer of power.

For businesses, the issue of low spare capacity is just the tip of the iceberg. Companies across the UK are increasingly looking to expand their operations and build larger premises but the infrastructure that governs this suffers from heavy under-investment, and this is having a wholly detrimental effect on overall growth and profitability. Ageing infrastructure is leading to buildings that are poorly insulated, poorly suited to their surroundings, and that use an alarming amount of energy to occupy and run.

The affordable solution

Businesses have a responsibility to the future success and sustainability of their operations to invest in their own decentralised sources of energy – such as utilising natural resources and localising energy generation through renewable means. Companies and local councils should consider site characteristics and evaluate where and how there is potential for generating power in an area: this may come from funding the development of a local windfarm or solar panels on rooftops, or even the use of non-recyclable waste from neighbouring businesses as fuel.

Firms must also integrate with communities and implement smart energy grids so that every building or local activity serves a purpose within the energy cycle. Through decentralisation, less energy is lost between the generator and consumer – meaning the cost is greatly reduced. For businesses this means increased competitive advantage.

At present there is a gap of 58% between the retail and wholesale cost of power. This presents businesses with another profitable opportunity if they generate their own energy through the selling-on of surplus power to local third party organisations.

The future of energy engineering

Both business and government have pivotal roles to play in ensuring the environmental landscape of the future. Companies must become holistically competitive by utilising government incentives that encourage the implementation of a low-carbon energy strategy. Taking these measures in the short term can lead to longer term growth and lower dependence on external energy sources – saving money through losing the burden of high energy bills and uncertainty, while appeasing stakeholders with a solid commitment to corporate social responsibility.

On the other hand, the government must take a hard stance on companies who do not attempt to create such an environment for themselves. Instead of paying companies to use less energy during times of shortage in the National Grid, local governments should be advising businesses on how they can rely less on a central system for their power.

The price of traditional fuel will only increase as its supply dwindles. By making the necessary reversals in National Grid usage now, there is a greater chance of higher capacity in the system for a real emergency – resulting in power even in times of shortage.

We simply cannot allow our current reliance on the National Grid for energy to spiral any further out of control. The situation we find ourselves in with such low spare capacity is shocking and unforgiveable, particularly given the infrastructure capabilities that exist in the United Kingdom to produce our own, clean and cost effective energy. 

Rolton Group is an enginering consultancy operating in the civils, infrastructure, mechanical, electrical, geotechnical and environmental sectors