Introduction to the current condition of the utilities industry:
The year has gotten off to an already intersting start with storms across the UK cutting off power to many homes, and tensions in Eastern Europe threatening our gas supplies. The utilities industry is at a pivotal moment in its recent history as we attempt to navigate a lot of uncertainty ahead of us. It’s hard to know for certain what the future looks like for businesses and homeowners alike but at Bright utilities, we have some knowledge about the future of the utility sector for the rest year. So we thought we’d package it into a handy guide so you can stay on top of what’s to come throughout the year.
This comes from our extensive utilities industry insider knowledge as experienced brokers in the sector, providing businesses with affordable and renewable energy. Below we will delve into four things you can expect from the utilities industry in 2022.
Energy prices squeezing the UK and growing energy poverty levels:
Because of the current imbalance in supply and demand on energy and gas for UK customers, there is still a growing concern for the direction the sector is going in. 2021 saw just under 4 million home energy customers displaced due to the number of companies going bust due to lack of regulation.
In conjunction with the low sun levels seen during December, this has impacted the energy demand for outdated sources of energy. Ofgem has attempted to mitigate the effects of the crisis by taking control of customers’ supplies when their energy companies go bust so they are never without power to their properties.
Additionally, Ofgem has introduced a price cap rise on utility bills for customers. However, this has increased by around £700 per year, pushing more people into energy poverty due to rising costs of living not being matched by wage increases.
Luckily, the government have recently introduced funding grants for new and upcoming renewable energy company projects to introduce more incentives to rely on green energy. With this help, the country may be able to move away from the current crisis, but for now the utilities industry is still at risk of putting many vulnerable customers into energy poverty.
An increased rollout of microgrids:
Microgrids are taking the utilities industry by storm as they cover many new ways of storing, producing and using energy. Storage technologies, generators, vehicle charging infrastructure, uninterruptible power supplies, multiple virtual power plants, and energy-efficient measures are some of the technologies involved.
Recent research indicates that 25.4% of UK and Ireland businesses have installed microgrids or renewable power sources (such as solar, wind) in an effort to reduce their environmental impact.
The global microgrid market is forecast to grow from just over £16.5bn in 2018 to over £29bn globally by 2023. This is great for the utilities industry as we have seen great growth in these systems that allow us to move a step closer to a greener future. Decarbonising is one of the government’s top priority to help the country meet targets to offset its carbon emissions in the fight against climate change.
2022 will see no slowing down of the process to rollout more mircogrids to enterprises, especially since microgrids can be linked to smart meters. The utilities industry boomed with smart meters in recent years as they are a great way to cut down consumption and can help reduce your utility bill at the end of the month. As energy suppliers push for more smart meters to be used, we can anticipate to see more companies embracing microgrids into their business.
Sustainability will continue to dominate the utilities industry:
As we move closer to targets set out by the UK government to meet decarbonising targets, there are more plans in place to offer funding for more vital projects. These include funding grants for new renewable energy sourcing projects and new energy storaging projects that are hoping to make their way into the utility market.
Moreover, more and more energy suppliers are now helping companies and everyday customers alike with installing electric vehicle fleets and EV chargers to help the growing demand to switch from combustion engines to electric vehicles. And, as electric vehicle prices are set to plummet, there will be an even bigger demand for the population to make the switch and we can see this prediction growing as 2022 progresses.
Due to the current state of the world, businesses need to invest in sustainable energy solutions to stay ahead of corporate social responsibility demands. Companies are some of the most vital groups that can help reduce the effects of the climate crisis, so we predict this prediction will help boost the utilities industry forward and in line with more sustainable goals.
Regulations will rule the roost:
Ofgem will conduct checks on companies to prevent more from going bankrupt as opposed to the ones that went bankrupt last year, displacing about 4 million home energy customers. In addition, they have a plan for energy supplier startups that prevents them from expanding until they can determine if their business model can sustain long-term growth.
Because of the crisis and the events that took place in the UK utilities industry last year, Ofgem is committed to making sure customers’ energy bills are controlled by moving them to another supplier if their current supplier goes bust, so they will always have power.
The utilities industry will continue to be governed by Ofgem and Citizens’ Advice. Citizens Advice will hold Ofgem accountable by ensuring that customers are protected and cared for properly. As the crisis is set to continue this year, the regualtion of the sector is predicted to stay so that it doesn’t get out of hand.
This year will continue to throw more curveballs that will disrupt the market as we navigate the tumutlutous times ahead. Luckily, Ofgem and Citzens Advice will do all they can to regulate the market, putting the country’s population at the forefront of their duties. You can find advice on their websites.
Visit the Ofgem website here: https://www.ofgem.gov.uk/information-consumers
Whatever the utilities industry faces this year, the current energy crisis and the move towards building a sustainable future will speed up the likelihood that these predictions will come true.