Smart Generation: State of the Market Report 2020

Smart Generation: State of the Market Report 2020

 Following the cancellation of the in-person All-Energy event for 2020, Head of Smart Generation at SmartestEnergy, Angus Widdowson talks us through their Smart Generation: State of the Market Report 2020.

It’s fair to say that 2020 has been a year unlike any we’ve seen before! The COVID-19 pandemic changed the world as we know it and the energy sector has been no exception. For our part, we missed the opportunity to launch our new report for independent generators at All-Energy 2020.

This year’s report picks up where our energy entrepreneurs series left off – focusing on both the size of and the factors affecting the independent generation market – so those of you used to picking up reports from our stand at All-Energy will recognise this year’s iteration.

Despite everything going on in the past few months, independent renewables have continued to deploy and make up an ever-increasing share of the overall fuel mix. Let’s not forget that the UK went a record 67 days without using coalfired generation earlier this year.

So even though 2020 represents a 10-year low for projects coming online, with just 75MW of independent generation deploying in the UK, we have to recognise the realities of the situation created by COVID-19.

Delays to construction and supply chains aren’t the only impacts, however. Record low levels of demand caused by the closure of workplaces across the UK, coupled with favourable weather conditions for renewables, gave us a glimpse into the future requirements of the energy system.

As more renewables connect to the grid and consumer’s energy efficiency improves, the requirements of the energy system will increasingly reflect those we saw during the national lockdown.

To manage the lower demand levels, the National Grid more than doubled the actions they took in the Balancing Mechanism year-on-year for March and April. They also introduced a new service (Optional Downward Flexibility Management) to allow it to turn off distribution connected projects when required.

The conclusion we can draw from this it that flexibility will be key to successful generation projects in future. As a company, we are already seeing energy entrepreneurs respond to these emerging challenges and opportunities by taking new and innovative approaches to deployment.

Co-location with storage to enable greater flexibility is one such way as technologies such as solar get ever closer to grid parity (74MW of operational battery storage is now co-located with renewables).

Maximising revenue streams by operating across multiple markets; taking flexible approaches to selling power; and Corporate PPAs are all playing a part in helping projects deploy without subsidy too.

Ultimately, the turn of the decade marks a real moment of transition for independent renewables. With guaranteed revenues ever-less likely for the majority of projects, the upcoming shift to merchant revenue models mean that funders behind generation projects are re-assessing their appetite towards risk in the post-subsidy environment.

Find out more by downloading your copy of the report

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