The Critical Role of Demand Side Flexibility in a Decarbonised Energy System

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In 2021, the share of primary energy consumption in the UK (across transport, industry, heating, and electricity) from fossil fuels was 78.3%. To achieve global net-zero targets, the need to transition existing electricity production to green, non-polluting sources is well established.
Another essential component of decarbonisation is the shifting of large amounts of non-electricity-related fossil energy consumption onto electricity networks. According to the International Energy Agency (IEA), industry consumes a third of all global energy, with heat generation accounting for three-quarters of that. An incredible 90% of this heat is generated by burning fossil fuels. There is a clear need to massively upscale sources of renewable generation, such as wind, solar, and hydropower, for the transformation of transport and industry into large electricity-consuming sectors.

An equally pressing challenge is the upgrading and expansion of existing transmission and distribution infrastructure. Existing grid infrastructure globally is not equipped to cope with the demands of the energy transition. The UK’s National Grid estimates that innovative green industrial processes and electrified transport will create a near doubling of electricity demand in the UK and US. This will require significant investment by the government and grid operators. The expansion of these networks is both very expensive and resource-intensive. In particular, vast amounts of copper will be required to expand and upgrade electricity grids. McKinsey and Co estimate a 6.5 million metric ton shortfall in copper production by 2031, highlighting the need for other solutions to grid capacity upgrades.

The need to revolutionise the generation, transmission, and distribution of electricity has created unprecedented challenges in the stabilisation of our energy systems. These are not anticipated as the product of far-off future networks symptomatic of lofty climate targets. The challenges are here today. In 2030, the EU energy system will lack at least 60 GW of the generating capacity it requires to cope with peak demand. Enabling this shortfall to be met with Demand Side Flexibility (DSF) would save €2.7 billion annually compared to the equivalent generation capacity. The widespread adoption of the technology could contribute to significant falls in the price of electricity for all consumers and help create a resilient and robust green energy system.

References :

Economist
https://www.economist.com/business/2024/02/18/why-the-worlds-mining-companies-are-so-stingy https://www.economist.com/briefing/2024/02/15/first-electric-cars-next-electric-factories

McKinsey
https://www.mckinsey.com/industries/metals-and-mining/our-insights/bridging-the-copper-supply-gap

National Grid
https://www.nationalgrid.com/stories/energy-explained/how-will-our-electricity-supply-change-future

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Are you ready to be part of the solution in our energy transition? At Oaktree Power, we specialise in implementing Demand Side Flexibility solutions that help industries reduce their energy costs, enhance grid stability, and move towards a decarbonised future. Contact us today to find out how your business can contribute to and benefit from a more sustainable and resilient energy system.

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