Historically, network tariffs job has been to finance the maintenance, upgrade and operation of the electricity grid. However, as the energy transition unfolds, tariffs are starting to have another job as an additional instrument for DSOs (distribution system operators, also known as distribution network operators) to operate the electricity grid by influencing consumers’ consumption. At Delta-EE, we see three ways for DSOs to untap the flexibility potential from customers, with tariffs being one of them. The additional two refer to participating in flexibility markets or direct control of customers assets.

This process is being reflected in the revision of residential network use of system charges in different countries. Part of this transition looks at fine-tuning established tariff schemes as fixed or a static time-of-use (where electricity retailers are charged differently at different times of the day to use the distribution network).

The New Energy Business Model team have been gazing into their crystal ball - borrowed from the Talking New Energy team - to predict what 2021 will bring for the energy transition. As ever, they don’t agree on everything. What do you think of their predictions and what do you believe 2021 has in store? Get in touch and let us know.

Andy Bradley, Director

Energy communities is emerging as one of the hot topics of the 2020s in the energy world.  This has been accelerated by the current Covid-19 crisis, which has made the need to find local solutions to global problems even more pronounced.  Many of the discussions around community energy are centred around electricity - but are we missing an opportunity by not talking about the benefits of a multi-vector approach which integrates electricity together with heat (and ultimately other vectors like mobility and hydrogen)? In this blog, we will focus on the opportunities for heat to be at the heart of energy communities.

The transition from “old heat” to “new heat” is making a community energy approach to heat more and more appropriate – and potentially more valuable.  We believe that working directly with communities on local heat decarbonisation strategies will be critical to the success of heating product and service providers in the future.  Energy communities with heat at their heart are not just the future – they are already here, and they are a growing opportunity not to be missed by the energy and heating industries.

Last week I wrote about the opportunity for energy communities to fund the green transition, based on the belief that there is a vast amount of consumer savings just waiting to be tapped into.   

A lot has happened since then. 

At the current time it’s difficult to think about the energy transition without thinking about the current COVID-19 crisis. The economic downturn affects all parts of the economy, depresses energy demand, and impacts the whole energy value chain. But what specifically does it mean for the transition from old to new energy? We’ve identified five key points

1. Digitalisation will accelerate. Companies with digital customer channels are less affected. Automated processes, such as those used by demand side flexibility providers, are carrying on as normal. Connected home propositions built around peace of mind may get more traction. These are just three examples.
2. ‘As a Service’ business models will gain more traction. Upfront capital will be harder to find for businesses and individuals alike. From electrification of fleets to new heating systems, propositions that remove upfront payments will be well positioned.
3. Subsidies & incentives are under pressure, but there are opportunities for ‘green’ stimulus packages. On one hand, government spending on the energy transition will come under pressure. Business models dependent on subsidies and incentives may suffer. On the other hand, if stimulus to kick-start economic growth have a green tinge to them, this could open new opportunities. Finally, historically low oil prices may be a once in a generation opportunity to reduce the US$500 trillion global subsidies that fossil fuels receive.
4. Innovation without a big price tag. Grand, shiny, expensive innovation projects have gradually been going out of fashion as companies focus on rapid, agile, fail-fast approaches to innovation. The crisis will accelerate this. Big new projects won’t be big priorities for most companies; but low-cost innovation will enable companies to keep pushing forward on the transition to new energy.
5. A further boost for localisation of energy. The current crisis has highlighted the fragility of our global, just-in-time supply chains and interconnected economies. One scenario for how we come out of the crisis is an increased focus on resilience, localisation and decentralisation. This backdrop would add a further boost for the rapidly emerging community and local energy sectors.

The current crisis is affecting us all – and our thoughts go out to those directly affected by the virus. The speed of the impact has been staggering. It has meant decisions are being taken incredibly quickly, organisations and people are adapting amazingly, and innovative approaches are being developed in days rather than months.

I’ve always argued that the acid test for Big Oil and their commitment to active, positive participation in the energy transition will come when the oil price crashes. When that happens, will they revert to their core businesses of fossil fuel extraction and processing, while cutting back on less profitable and non-core activities such as new energy? 

That moment has arrived. Oil prices have crashed to multi-decade lows as demand has plummeted following the stalling of the world economy, while oil supply has been much slower to respond.