The UK’s energy system is undergoing an enormous shift as it strives to decarbonise. Every part of the industry has its own unique set of challenges, but there are macro trends affecting the entire sector and the priorities of more flexibility, increased affordability and tackling Net Zero that unite us all.
James Houlton, Managing Director for Energy & Utilities at Mesh-AI, explains what’s driving changes in the energy system and some of the key questions we need to address.
The four Ds: Macro-level shifts
The four Ds drive change, disruption and investment in energy systems, at a macro-level. They are:
Decarbonisation
The push towards a zero-carbon energy system is one of the most significant influences on the sector. This involves transitioning to a zero-carbon grid and helping customers reduce their CO2 emissions from energy consumption and its generation.
Digitalisation
Many areas in the energy industry still rely on outdated systems and practices, including paper-based processes. Modernising the UK’s energy system through digitalisation is crucial to support increased demand, complexity and a mix of generation and demand assets. Central to digitalisation is automation using data, AI, and machine learning to create a more efficient and intelligent energy system.
Democratisation
Empowering consumers to have more control and options in their energy consumption is key. Whether domestic or business consumers, the goal is to provide them with choices about how, where, and when they use energy.
Decentralisation
Decentralisation is transforming the traditional large-scale, one-way energy system into smaller, more agile parts. This includes individuals generating their own energy through solar panels and home automation systems, as well as smaller participants taking on roles traditionally held by large power stations.
The rising energy demands driving change
There is a number of areas where demand for energy is rising significantly. If the four Ds above require a more agile energy system powered by low-carbon electricity, the below areas show how it will also have to meet rising demand.
Doubling electricity demand
Electricity demand in the UK is expected to double by 2050. Meeting this demand calls for significant expansion of the network and the country’s generation capacity. This means not only replacing existing infrastructure but also doubling its size to meet future needs – all while balancing priorities of Net Zero.
Electric vehicles
The transition to electric vehicles (EVs) is accelerating, with the UK planning to ban new sales of internal combustion engine cars by 2035. This shift requires substantial investment in electric charging infrastructure and increased grid capacity to support widespread EV adoption.
Renewable footprint
The UK’s renewable energy footprint is projected to grow to 70% by 2035. This calls for a fourfold increase in the country’s offshore wind capacity. Not only will new wind farms need to be built, but they will also need to be integrated into the mainland grid efficiently.
Increasing interactions
The number of interactions within the energy system is set to increase exponentially. This includes more small-scale energy generation, such as farmers installing solar panels and households using large-scale solar systems. Managing these interactions will require a highly intelligent and automated energy system.
How the existing energy system needs to shift
The current energy system is largely one-way, where energy flows from generation sites through transmission and distribution networks and is sold to consumers via retailers.
The future energy system will be more dynamic and two-way. Consumers, or ‘prosumers’, will generate, store, and feed excess energy back into the grid, using technology such as solar panels and battery storage. To make this work, we will need advanced prediction and management of both supply and demand, focusing on efficiency and responsiveness.
All of this requires a mindset shift, thinking instead of how to be more energy efficient and match the demand to supply – especially at peak times – rather than the other way around. So, where we may have uncertainty in our supply, we must try to manage demand to the level of generation or supply we have, instead of managing supply to the amount of demand.
The energy trilemma: A new set of priorities
Three major priorities affect our modern energy system: operating with flexibility, handling complexity, and transitioning to Net Zero.
Resilience through flexibility
Flexibility in energy consumption is essential to smooth demand curves and avoid network constraints. Our networks don’t have the capacity to meet projected huge increases in demand for electricity. So, at certain times of the day, there may be constraints on energy use. The UK’s energy system needs to incentivise customers to change when they use energy, to help smooth that demand curve and remove constraints.
Relying on higher shares of renewable energy generation presents another set of challenges. With unpredictable generation from wind and solar, we’ll need to work out how to shift energy demand to when more energy is being generated, as we won’t be able to turn up and down supply.
To become more flexible, the energy industry needs to share and collaborate better. The industry comprises various key actors, including retailers, network operators, and the National Energy System Operator.
Supporting organisations, such as the Department of Energy Security and Ofgem, play crucial roles in regulation and policy setting. The transition to a more digital and decentralised energy system will require collaboration among all these actors.
Affordability through reducing complexity
Increased decentralisation will make the energy system more complex. As demands on the grid rise following increased need for electricity to power homes and vehicles, having a reliable network of assets is integral.
A decarbonised society requires a grid capable of moving energy in different ways. Traditionally energy went from the generator to the consumer, but a decarbonised grid needs to be bi-directional, capable of supporting the consumers who are contributing energy to the grid, too.
To add another layer of complexity, there are key challenges around forecasting and predicting energy needs accurately; integrating infrastructure efficiently; securing sufficient investment and human capital; and managing the variability of renewable energy sources. Balancing cost, carbon reduction, and energy resilience is essential to meeting these challenges.
To overcome these, it is essential that we have robust data and market intelligence to power real-time decisions.
Net Zero – a sustainable energy system
Achieving Net Zero means removing CO2 from the entire energy system, from generation to consumption. In the face of rapidly increasing demand, how can the energy system turn off coal and gas power stations in favour of low-carbon generation? How can any new generation be connected to the grid?
Part of the Net Zero transition is helping consumers become more energy-efficient by adopting the right technology. These include heat pumps, solar panels and battery storage. But how is this facilitated? Who pays for it and what’s the return? Why should customers adopt these low-carbon technologies?
These are all questions leaders will need to answer in the short-term if the energy system is going to meet these goals. Data’s role will be integral in informing these decisions and that means sharing quality data across the system and greater collaboration.
A reimagined energy system underpinned by data
Within all of these drivers and priorities for the energy system, the availability of quality data is the unifying factor. Energy and utilities enterprises need improved accessibility to the right data to drive decision making across operations if they’re to meet the three-pronged goals of resilience, affordability and sustainability.
We at Mesh-AI are at the forefront of reimagining how energy firms approach data and harness it within their own transformation journeys. We’ve worked with some of the industry’s biggest players, such as National Grid and EDF, and our track record speaks for itself.
Find out more about our work:
- Accelerating Net Zero at National Grid Electricity Transmission with Data & AI
- Transforming EDF’s Energy Insights Through Strong Data Foundations to Reach Net Zero
About the author
James Houlton, Managing Director for Energy & Utilities at Mesh-AI, brings more than 20 years’ experience in the energy and utilities sector working with electricity, gas and water across the value chain for organisations such as National Grid, Cadent Gas and E.ON. James also has more than five years’ experience focusing on innovation, technology and cultural change with Amazon and latterly on data, AI and machine learning technologies with Mesh-AI.
Mesh-AI is the leading specialist data and AI consultancy partnering with energy enterprises, including National Grid, EDF and TotalEnergies, from strategy to implementation, turning data into real competitive advantage.
