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Attending the UK Electricity Storage Network’s 'Good Storage, Better Storage' event a few days ago, one thing was obvious: energy storage is high up on the UK’s energy agenda. BEIS (Department for Business, Energy & Industrial Strategy) and Ofgem clearly understand what the challenges for energy storage are and that they need to be addressed.
We see these challenges ranging from the lack of definition for energy storage, potentially designing a new asset class and resolving the ownership issue for network operators, right across to market barriers such as the ability to access and effectively stack revenue streams. All in all this provides a glimpse at the plethora of barriers for energy storage that remain in place in the UK today.
Policy fundamentally dictates the commercial opportunities within a market, and the business models that are viable. With energy policy shifting focus from electricity, towards heating and transport, could the regulatory moves and discussions we are seeing in the transport sector be mirrored in heating?
A plethora of incentives for EVs are now in place across Europe, discussion of the mandatory requirement for every new build to be equipped with an electric recharging point and the outright ban of certain products are underway. Although developments in the heating sector are currently slower moving, the first steps are in place, in particular new build requirements. It is clear that when countries do decide to act, change and transformation can be rapid.
The direction of travel is clear – our energy and heating markets are undergoing a profound transition. The dynamics of power generation that have previously held true for over a century are being flipped precisely on their head, coupled with rapidly evolving and increasingly sophisticated energy demand characteristics.
And now even the largest, most established - and traditionally fossil fuel focused energy companies - are beginning to murmur a response.
Sunny days have come to Europe in the first weeks of spring, meaning sales of connected heating controls will start to slow down, as customers start to turn off their heating for the summer. This is a perfect time for industry stakeholders to take a step back, and consider the learnings they gathered over the winter… before the next one comes!
This next winter season might actually be the last chance for the European energy industry to establish itself in the connected home space, and to own part of the customer relationship. It is extremely likely that this market will soon be attacked by giant companies such as Amazon and Apple, and by large telcos and retailers entering similarly to how O2 and Dixons Carphone have started doing to do in the UK. These companies will most likely own the customer relationship if they succeed, and the energy players will have reduced market power if they try and work with these companies to play in the market.
"Data analytics will be central to the future of the energy retail and energy services business."
To some this might be a bold statement, but to us there is some very strong logic supporting this view. Both for conventional commodity retailers, and for companies that see the future as more distributed, customer centric, and service orientated. Our logic behind this is based on five drivers:
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