What Major Stories Could We See in 2015?
Electricity Market Reform starts in April 2015. This is predicted to add 0.125p/kWh to your bill.
ESOS (Energy Saving Opportunity Scheme). All companies that have a turnover of more than 50 million euros or more than 500 staff will require a mandatory audit to be compliant by 5th December 2015.
Election year. We can be sure that there will be significant changes to the regulation of the energy industry after the election. With nine energy ministers in as many years, as well as no clear party looking to create a majority, we can expect further confusion and lack of clarity for the energy industry.
The rise of self-generation. Businesses can no longer afford to take the increase in rising power prices and will look to become more energy efficient and explore producing their own energy on site. The likes of Sainsbury’s and Tesco are using the waste food from their distribution centres to be converted into energy to be used on site. Combined Heat and Power engines, which use natural gas to produce electricity and heat are an economical option for companies reducing demand on the grid.
Start-ups and technology companies will create new and innovative ways to use energy. These innovations range from small scale waste-to-energy for schools and hospitals to demand side response, shutting down non-essential air conditioning units for 30 minutes at a time and creating extra revenue streams.
Renewables to make big inroads. Solar panel costs have tumbled substantially. This now makes it easier for those with a decent sized roof or plot of land to make high returns on investment, far higher than investing in equities. Over 1000MW of wind capacity is expected to come online to the UK in 2015, showing how strong wind generation will be available. This will however add to the dilemma of predicting when generation will be and how to manage it across the nation.
Evolution of energy suppliers. Centrica is soon to get a new CEO. Ian Conn will take the helm of the troubled company. Its subsidiary, British Gas, is under significant pressure to deal with poor customer service, transparency in profits, and dealing with a potential break up if politicians decide to force vertically integrated businesses to do so.
E.ON will be splitting into two distinct entities in order to focus heavily on renewables and energy efficiency. It will put coal and high risk assets, such as all exposure to oil and Russia, into a separate company, protecting E.ON as we know it.
Smaller suppliers will continue to rise. As each reaches its critical mass before it begins to understand the pains of the ‘big 6’ in dealing with customer service and the cost to service, we will see more competition for the industry and better prices for consumers.
Community Energy projects will rise as means to bulk purchase and reduce costs. In addition to this, communities investing collectively into renewable generation assets will help to create additional income for themselves as well as greening the grid, a true win/win.
Power and gas prices, in our crystal ball, will remain horizontal for much of the year. With demand continuing to decrease, power and gas prices should hold steady. Gas prices will hike with any longer than usual cold snaps, longer than usual maintenance, or any cuts in Russian gas to Europe where the UK will have to ramp up its exports.
Power prices will stay flat due to the increase in renewable generation coming online as well as nuclear plants back to full operation, unless there is a dramatic problem with them.
Oil prices will also remain flat with the new normalisation of prices. A very strong supply can counter any sudden rise in demand. Cuts in production from OPEC are possible which will boost prices should they decline below $50 a barrel.
