— 2017

The energy industry has transformed over the past few decades in both the way energy is produced and the way that we, as consumers, use it. This report highlights current technological and cultural trends in the energy industry.

In the UK, prior to the 1990s, the vast majority of our energy was generated from fossil energy resources (coal, oil and natural gas). Although there was some alternative means of power generation (such as nuclear power, which generated approximately 26% of the UK’s energy in 1997), the UK’s reliance on fossil sources meant that by the 1970s, the UK was one of the world’s largest producers of greenhouse gases. Something had to change, both for the preservation of the environment and to address the diminishing supply of fossil sources.

Further motivated by legislation which required energy producers to reduce their carbon emissions and incentives to invest in alternative energy sources, energy companies started to invest heavily into research for renewable resources. In addition, as knowledge of the environmental impact of carbon emissions became common knowledge to the general public, there has been a push by energy providers to reassure their customers that they are environmentally conscious.

Renewable energy is gaining power

In 2016, the UK generated around 24% of its energy from renewable sources, compared to 9% in 2015. The UK’s reliance on renewable energy is expected to increase to 30% by 2020. London mayor, Sadiq Khan has pledged to have London running on 100% ‘clean’ energy by 2050. This is a massive achievement considering the near non-existent use of renewable sources in the early 1990s. While there is a long way to go before the UK can achieve 100% reliance on renewable energy (something that only been achieved so far by Iceland and Norway), the UK continues to steadily increase its percentage of energy supplied by renewable sources.

Some of the most prevalent sources of renewable energy in the UK include:

Wind Power – Via the use of turbines, wind is used to generate electricity. As one of the main sources of renewable energy, the UK has become a world leader in the use of this method of production, with over 6,000 energy-generating turbines around the UK.

Solar – Another growing area of energy production with the rapid reduction in the cost of solar panels, solar energy production is also one of the most popular methods of generating energy in residential properties. It has become very common to see solar panels installed on the roofs of homes across the UK.

Biofuels – Gas produced from waste products such as sewage and landfill sites has started to be utilised in energy production. One of the main benefits of this type of energy production is that it doesn’t rely on favourable weather conditions (unlike solar and wind power) to produce.

Hydroelectric – The movement of flowing water is used to generate electricity at many sites across the UK. One of the main benefits of this type of energy production is that at the majority of sites, the flow of water can be increased or decreased to meet demand.

Generating Renewable Energy at Home

With the ever-increasing efficiency of converting renewable energy sources into electricity, the technology involved in renewables is becoming steadily cheaper to the point where it’s not only feasible on an industrial scale, but is becoming accessible to the average homeowner. In fact, all of the methods mentioned above are available in some form on a residential scale. This means that people can create their own electricity at home without the need to build their own nuclear reactor. There are numerous options for generating both electricity and heat at home that are helping people to place less reliance on the national grid.

Although there is often a high upfront cost for these technologies and it can take several years to break even, people seen keen to invest for long term savings. Homeowners and landlords are also incentivised to consider renewable energy production in the home via government grants for the installation of technology, money made from transferring excess energy back into the national grid and the satisfaction of minimising their carbon footprint.

Energy storage will be the next big challenge

While in theory, renewable sources of energy production have the potential to provide a near-endless supply of electricity to the UK, it does have is limitations. One of the current drawbacks of renewable energy is that there is no guarantee that they can be utilised 100% of the time. For example, several of the technologies mentioned (wind, hydroelectric, solar, etc.) are reliant on favourable weather conditions. Therefore, it is likely that a connection to the national power grid and more traditional sources of energy production need to be retained to cover potential deficiencies.

Another drawback for renewable energy, particularly energy that is produced on a residential scale, is the ability to store generated electricity. As anyone who owns a smartphone will know, the battery never lasts more than a day, requiring you to charge it up every night. Battery technology hasn’t developed as fast as consumer demand for battery draining devices. The same is true in the energy industry. On a day where it is very sunny and windy, that doesn’t necessarily mean that you can store this energy for a rainy day. Currently, any excess electricity generated is fed back into the national grid for immediate use. This is generally because of the lack of sufficient technology to store excess electricity in the home. Whilst this does create small profit for the energy-generating household, it does limit their ability to become self-sufficient. One company that is looking to address this issue is Telsa.

Case Study: Tesla

As well his work with PayPal, SpaceX and Tesla, Elon Musk has begun focussing the latter company’s efforts on solar energy on both a household and industrial level. Tesla’s aim is to home energy production ubiquitous through the design of its products. As an example, Tesla produces solar panels for homes that resemble regular roof tiles in order to maintain a desirable aesthetic.

But one area where Tesla is going beyond merely improving the look of home renewable technology is the development of a high capacity battery that they call Powerwall. The Powerwall makes the solar energy generated by homeowners more valuable because it can now be stored for later use instead of being added to the grid. This means that spikes in energy generation such as during a particularly sunny or windy day can be stored for use during periods where energy generation is limited, such as at night.

Energy providers can be sustainable – and profitable

While we use more energy reliant devices than ever before, technology is improving the efficiency of electrical devices enough that is starting to have an effect on our consumption behaviours. A good example of this is the phasing out of the incandescent light bulb over the last decade. Prompted partially by technological developments and EU legislation on energy conservation, the incandescent bulb has been replaced by far more energy efficient technology such as LED lighting. This shift from one lighting method to another has been shown by independent research to have significantly reduced the average annual electrical consumption for lighting in a UK home from 720 kWh in 1997 to 508 kWh in 2012.

With an increasing awareness of the cost and environmental impact of energy usage, an energy provider’s traditional sales model is not as valid in 2017. Many energy institutions such as British Gas have started to realise that they need to offer extra value in order to provide the support that their customers desire and prevent them from switching to a competing provider.

Case Study: British Gas

British Gas came to the realisation that their customers now have many options available to them when it comes to the supply of energy. In order to contend with the rise of home renewables and smart devices that effectively minimise the amount of energy that customers require from the national grid, they have embraced this shift in customer behaviour.

In the last few years they have expanded their offerings to more than just supplying gas and electricity. For example, through the British Gas website and app you can see detailed visualisations and stats for your consumption, submit meter readings and compare your usage to similar sized households as a way to benchmark your consumption.

Rather than distancing themselves from smart home devices that allow users to make the most efficient use of their energy (and potentially eat into profits), British Gas came up with their own system called Hive that allows users to control their boiler, lighting and home appliances from anywhere in the world.

With their HomeCare service, British Gas offers affordable access to boiler engineers who will resolve any issues for a monthly fee. Overall, British is using this diverse range of offers as a way to position themselves as a one-stop-shop for everything energy related.

Gamification is transforming services

Advances in mobile technology means that it is now easier to manage energy consumption in the home than ever before. As mentioned previously, products and services such as the Nest Learning Thermostat and Hive by British Gas allow you to control both your boiler, lighting and home appliances through a smartphone app.

The benefit of these services (apart from being an excellent way for lazy people to avoid having to get up to switch on the light) is that they allow users to make frequent changes to their energy usage patterns in response to their unique lifestyles. For example, traditional heating controls allow you to manually switch your boiler on or have it come on at set times. Often these controls are located on the boiler and are not particularly easy to reprogram. This means that users tend to leave their heating timer set on the same program. What about a night when they are working late or decide to stay at a friend’s house? In these situations, the heating program will still start the boiler and heat the house unnecessarily leading to wasted energy. Smart heating controls allow you to switch on energy using devices when they are needed and switch them off when they are not, very easily.

This type of technology gives users a sense of control that they were previously lacking and introduces elements of gamification to the seemingly mundane act of managing energy consumption, a strategy that has proved very popular in other areas, such as health and fitness.

Another area where technology is supporting home energy usage is in the use of smart meters. With the traditional model of energy consumption, households only find out about their energy usage via a monthly or quarterly bill or statement. The statement normally shows a month’s worth of usage as a lump sum with no indication of what devices or behaviours led to the amount they were charged. This makes it difficult to plan effectively to reduce consumption.

Smart meters allow you to monitor your energy consumption in real time, show you the cost of the energy you are using and show the immediate effects of different appliances on energy usage. Depending on the energy provider that you are connected to, they can also submit meter readings on your behalf. It is for this reason that companies like British Gas have started a scheme to send free energy meters to all of their customers.

Energy Trends and Service Design

A household’s or company’s relationship with energy production and consumption has become an increasingly important one. People are now more concerned about where their energy is coming from. Indeed, it can often be an important selling point for a company to be able to claim that the energy they use comes from entirely renewable sources and that their carbon footprint is minimal.

Service design is the key to making people’s relationship with energy as seamless as possible. With consumers more energy conscious than ever, it is down to energy providers to be able to offer more than just an endless supply of power to people’s homes. This could be in the way energy companies communicate with their customers, research into new products and services or allocate internal resources. Even in the face of fundamental changes in technology and consumer attitudes, effective service design can help energy companies remain relevant to their customers.

Written by Tom Knoll