We are currently living through a time of transition. As the world begins to go about designing and implementing the types of policy required to keep global warming below 2°C, one inevitable area of significant focus is how we are going to decarbonise our energy supply.
There are several legacy issues to be addressed, such as the intermittency of many renewable technologies, the inefficiency with which we use energy and the vast differences between peaks and troughs in demand. There’s no quick fix and it’s going to require a combination of factors to solve these problems. However, progress is already being made on all fronts. For example, the types of storage technologies required to address intermittency are becoming more price competitive by the month. Similarly, the EU and UK governments have introduced a raft of policies aimed at improving energy efficiency and smoothing out demand cycles.
Indeed, the Energy Savings Opportunity Scheme (ESOS), the UK’s response to Article 8 of the Energy Efficiency Directive (EED), has made it mandatory for large companies to conduct energy audits at least once every four years, whilst the National Grid has made plain its views on the growing importance of Demand Side Response (DSR), where users are financially incentivised to shift or reduce their electricity use at peak times, for softening peaks and filling in troughs in demand.
It will be intriguing to see how these policies intersect. Well-designed policy interventions should not only achieve their objectives, they should complement interventions in the same area. The benefits of ESOS and energy auditing are relatively obvious – greater understanding leads to improved efficiency and ultimately reduced expenditure on energy, coupled with a decrease in carbon emissions – but could a hidden benefit be an uptake in DSR?
First, it’s necessary to explore the barriers to the uptake of DSR. Unsurprisingly, the main barrier to DSR uptake is a lack of understanding, both about DSR itself, but also about how businesses power their own operations. To explore the technical and economic feasibility of DSR, the first step should be to gather information such as the patterns of electricity consumption across all assets, who manages the assets, the local grid infrastructure, and the on-site technical and operational constraints. Unfortunately, the reality is that the majority of businesses do not have access to this kind of information, nor do they have any intention of gathering it.
Enter ESOS. For those less familiar with the steps required to comply with ESOS, it involves measuring and profiling 100% of the energy consumed by a business over 12 months, auditing at least 90% of that energy to identify energy saving opportunities and obtaining sign off internally by a board-level director and externally by a Lead Assessor. Whilst the effectiveness of ESOS Phase 1 was debated, it did at the very least shine a light on the glaring gaps in energy management at a board-level for first time for many large organisations. With ESOS Phase 2 beginning to ratchet up, over 10,000 of the largest organisations in the UK will be profiling energy consumption and undertaking audits again at some point over the next 2 years.
This presents a massive opportunity to increase both awareness and uptake of DSR. There’s no reason why a well-thought out and executed ESOS assessment couldn’t provide all the detail required to develop a full business case for DSR. This will, however, require some forethought. For example, if you’re a business searching for a contractor to conduct your ESOS assessment, it’s worth specifying what you need out the final report, as a budget ESOS assessment is unlikely to provide the depth of energy analysis required to progress DSR. Conversely if you’re carrying out ESOS assessments, exploring DSR may not be your top priority given it doesn’t necessarily improve energy efficiency, it can merely shift patterns of consumption.
Ultimately, we shouldn’t be looking to address the challenge of decarbonising our energy supply in silos. Tackling the full range of barriers to decarbonisation will require a multi-pronged approach with as much emphasis on improving efficiency and smoothing the fluctuations in consumption as other considerations such as increasing the overall renewable capacity. Only by looking at the problem holistically will we be able make the transition to a decarbonised electricity supply both efficiently and effectively.
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