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Energy Transition

The energy transition unlocks the door to a low-carbon energy future

The energy transition unlocks the door to a low-carbon energy future

Multiple forces are driving the transition to a low-carbon energy future across Europe. These include political, consumer and economic pressures to reduce air pollution in cities, address climate change and above all exponential reductions in the cost of renewable energy and battery storage. 

According to Bloomberg New Energy Finance (BNEF)’s respected ‘New Energy Outlook’ modelling, more than half the total electrical energy supplied to grids in large European economies, including the UK and Germany, will be coming from variable renewables by 2030. On the demand side, an equally seismic change is coming with the mass adoption of electric vehicles (EVs) and electrification of heat. 

What is the energy transition?

For policy makers

While the energy transition is inevitable as it is driven by economics, its cost is not. According to BNEF, the transition will be faster and less costly if flexible technologies and energy markets become the cornerstone of the grid. That is because both wind and solar power add to variability in supply and mass EV charging will add greatly to variability in demand. To avoid the need for costly grid upgrades and back-up generation, the system must become more flexible to smooth resulting peaks and troughs in demand and supply.

For business

As the cost of onsite renewable generation and storage continues to fall and deployment of EV charge points in car parks increases, buildings of the future will become energy hubs. This means balancing a range of locally generated and stored energy sources with variable loads – from charging stations to heating and cooling and other appliances. In addition, building owners can reduce their energy costs by maximizing self-consumption of onsite renewable sources and reducing peak demand charges, and generate additional revenues through the provision of grid balancing services to the network operator. While business continuity, comfort and resilience will continue to be of primary importance to building owners and their tenants, the need to reduce energy costs and carbon footprint to meet stakeholder and regulatory requirements, such as the EU’s Energy Performance of Buildings Directive, will become ever more important.

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For home owners

A big part of the energy transition will also take place at home as meaningful decarbonisation will require the full electrification of heat and personal transport. In order to reduce the strain of these additional electrical loads on the grid and local distribution networks, it will be essential to improve the thermal efficiency of all homes, generate and store electricity locally and time shift demand for certain loads – in particular EV chargers. This requirement is giving rise to a growing number of highly energy aware ‘prosumers’ – producers and consumers of electricity – who are benefiting from increased self-consumption. In some cases they are even being remunerated for the essential grid stabilization services they are able to provide. The development of new energy markets that enable consumers to take part in demand response and trade their locally generated electricity will not just reduce bills, but also the need for expensive grid upgrades.

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