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Iona Capital at Energy Live News

6 Nov 2018

The Rt Hon Claire Perry MP, the Energy Minister spoke at the event which was attended by over 500 delegates from the energy industry. The Minister portrayed a  positive outlook for the UK Energy industry and identified some key themes which give considerable confidence to the investment community and celebrated some of the many achievements to date. The UK has environmental regulations which are amongst the best and most ambitious in world and has a reputation as a crucible of innovation in development and implementation of low carbon technologies. 

 

Investors should take confidence from the minister’s assertion that the current team within the department of Business, Energy and Industrial Strategy, listen to reasoned argument and rigorous analysis. While this is primarily in relation to onshore gas exploration, it should provide some reassurance to investors and developers trying to resolve the UK’s waste management infrastructure shortage and provide base load power generation in support of the grid. 

 

ABB Fast Charging

The CEO of ABB’s UK Division announced as part of his panel session the development of 350kw EV chargers which can give 200kms of charge in around 8mins.  This is a significant milestone on the road to widespread EV adoption. There are issues with this level of capability however, as six vehicles charging simultaneously will put a 2MW load on the distribution network. It is clear that the UK grid infrastructure in support of the UK motorway and trunk road network will need to be significantly upgraded. There may well be opportunities for baseload embedded generation to support the fast charging infrastructure which will be required. 

 

Of greater interest to investors may be ABB’s analysis that only around 20% of the charging infrastructure needs to be rapid.  The remainder can trickle charge and cater for the 90% of the time when 90% of vehicles are parked either in driveways, on streets, at railway stations or at places of work. The developer who can get a strategic partnership with organisations such as Network Rail or the major airports for electric carparks on a long-term basis will have a very attractive investment proposition. 

 

Biomethane’s time has come, but is it all a bit too little too late?

The wider UK energy sector has definitely woken up to the value of biomethane, and specifically green gas certificates. Corona Energy, Bulb and others are trying to buy as many green gas certificates as they can, with prices starting to approach £3 per MWh per certificate. There is still appetite for another 30-50 gas to grid anaerobic digestion plants to be built before the RHI comes to end in early 2020. Consequently, unless the government provide further support, it is likely that the one solution able to decarbonise heat provision, which is available right now utilising existing infrastructure, will cease to be a significant factor in the decarbonisation of our energy system. 

 

The rise of non-fossil Big Energy

Companies like Orsted and SSE either already have, or are rapidly divesting fossil fuel assets. This should send a clear message to the investment community of the value in renewable energy and based circular economy asset classes. Off shore wind requires flexibility and base load generation to support the grid in times when the weather conditions are not right. Anaerobic Digestion and Energy from Waste Assets are perfectly designed to support storage assets in covering when there is insufficient variable generation available. The nature of these assets makes them much better suited to long term private money due to the long term non-correlated returns which they are able to deliver. 

 

Flexibility Platform Offerings – this is much more than just batteries.

A growing trend which is now starting to really gain traction in the wider market is the use of data and connected smart systems to create power supply and demand flexibility amongst small and medium sized enterprises and in large asset classes. More companies are developing smart software solutions which can monitor and control power usage in order to take advantage of grid services. This varies from turning down fridges and furnaces, to smoothing power demands from modifying operational processes. These smart solutions can be integrated with embedded generation such as gas CHP, solar carparks, and battery storage funded by a bespoke Energy Service Company.  This provides the multiple advantages of reducing power bills, removing the requirement for large capital expenditure on projects with multiyear pay back periods, and de-risking integration of different systems and operations by passing the responsibility to someone else. Throughout however, the main electricity network is available to fall back on in the unlikely event of technical issues. 

 

Iona Capital is well placed to provide funding and expertise to establish bespoke Energy Service Companies to help power users reduce costs, guarantee quality of supply and reduce CO2 emissions.exibil

 

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