A report published by Forum for the Future claims that the energy system in the UK is changing at such a rate not seen since the Industrial Revolution.
A complete decarbonisation of the system in the near future is deemed to be necessary to avoid dangerous climate change and economic issues. The utilities sector as a whole faces decisions which may disrupt the medium-long term value of companies, which should inevitably feed down through the energy sector and the wider economy.
European utilities have already lost over €100 billion in value since 2008 and the primary factors driving change include decarbonisation, digitisation and decentralisation along with democratisation. Interestingly, it is claimed that the system has grown from 80 power stations to over 900,000 power generating units.
This vastly increased number includes a number of renewable technologies along with rooftop solar units. Typical consumers in the previous system are now becoming much more active in the power usage and personal generation.
The impact of decentralisation has the potential to cause issues for traditional power companies; as Australia’s grid industry predicts that 50% of the electricity used in 2050 will have been produced by consumers.
To date, governments and industry have consistently underestimated the impact and growth of renewables along with the drastically reduced costs associated with such technologies.
For example, it was forecasted in 2002 that globally, the installed capacity of solar power would hit 10GW in 2020. The actual figure as of 2016 was a capacity of 300GW globally, with the UK single-handedly surpassing the original global target of 10GW.
Investors are now being encouraged to come forward to potentially push the sector toward a more positive outcome. While some utility companies are already in the midst of losing market share, there is likely to be more disruption to the market as a transition to a decarbonised energy system becomes common place.
A Solution in Sight?
Through the integration of innovative technologies and business models, it is the view of industry experts that the big utility companies should lead the way in bringing change or else face the threat of an unsustainable future in their current format.
The processes being put forward to accelerate the positive change include the transition to zero or low carbon generation, distributed energy and storage capabilities. Along with changing the interaction and relationship with traditional customers.
It seems, however, that transport needs to play catch up with the industry. Figures show that there are only around 100,000 electric vehicles and plug-in hybrids on the road in the UK. Whereas 99.7% of vehicles are powered purely by fossil fuels.
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