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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
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.
We often get asked questions like “Do you think Amazon will acquire an energy supplier?”, “What will BMW’s EV charging strategy be?” and “Are the oil majors really interested in new energy? and we have a lot to say about each of them. However, given the pace at which the energy transition is happening – with opportunistic acquisitions, product launches and partnerships springing up in places that would have seemed unthinkable a year or two ago - probably the only answer we can give to these questions with absolute certainty right now is to “expect the unexpected”. We certainly try to.
Having said that, Europe’s oil majors would currently appear to be best placed in the battle to capture the new energy customer. Given that we recently conducted a comprehensive review of the activities of new market entrants in this space – we can say that with confidence. The oil majors have a combination of strategic need and financial strength which is unmatched at this moment in time. As such, we have little doubt that the likes of Shell and Total will continue to be highly active as the new energy market develops, and we fully expect some of their rivals (BP, Eni, etc.) to increase their activity too.
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.
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