Coronavirus: Business planning for the energy sector

During these testing times of global health and economic crisis, the one thing the business world craves (apart from the good health of their teams, naturally) is certainty.

We are grateful, therefore, to our friends over at the Edie newsroom for pulling together an excellent checklist for energy professionals to use during this time of upheaval.

We endorse their strategy and would like to take this opportunity to communicate it directly with our clients and anyone seeking advice from us as this pandemic and associated problems unfolds.

Below is the article posted on their site on Tuesday, March 24^th:

https://www.edie.net/news/6/Coronavirus–Seven-key-considerations-for-energy-professionals/

Coronavirus: Seven key considerations for energy professionals

As the coronavirus outbreak continues to slow economies across the world, industrial and commercial energy demand is falling as domestic demand increases. Here, edie summarises seven ways which energy professionals can respond to this challenge and others borne by the current pandemic.

Energy professionals, like most, are currently dealing with changes to their role. These key considerations will help to navigate these changes in the coming weeks.

Turn on the news at present and the first thing you’re likely to see is a story about the health or social impacts of Covid 19. As of 3pm today (24 March), the UK had recorded 6,650 cases and 340 deaths.

But the pandemic’s impact on the energy sector is also front-of-mind for many. A brief internet search will bring up all manner of articles regarding oil and gas price crashes; reduced transport use; the pandemic’s effect on the renewable energy and electric vehicle (EV) sectors; and how utilities are complying with Government advice while keeping lights on and taps running.

This information – coupled with ever-evolving expertise on how the coronavirus pandemic will affect business practices, investment and green policy – will doubtless be of great interest for energy professionals.

Here, edie cuts through this swathe of information to outline seven key considerations for the to-do list of any energy professional working through the current pandemic.

1) Reassure stakeholders that the lights will stay on

Utility firms of all sizes and organisations such as National Grid are currently facing a deluge of consumer, investor and media questions along the lines of: “Is there a risk to supply?”, “Can the grid cope with increased domestic and reduced commercial demand?” and “Will essential maintenance works go ahead?”

While the answers here may seem obvious to those with energy expertise, it is worth remembering that many of your key contacts either need or would appreciate the reassurance.

The National Grid’s latest annual data states that the majority of UK’s annual electricity demand was split between domestic (30%), industrial (26%) and commercial (21%) in 2019. While these proportions are expected to take a new shape this month and, indeed, this year, the official line is that the changes have an “extremely small” chance of overwhelming the grid. If the situation in Italy is anything to go by, total national gas and electricity demands are set to fall – not increase – and both ESOs and DNOs are planning for this.

As for maintenance work, most major UK utilities have plans to continue delivering essential projects on time – albeit at the cost of pausing non-essential schemes in a bid to shield workers and minimise disruption for home-workers.

2) If you’re shutting down, consider all the practicalities

From businesses mandated to close, such as “non-essential” retailers, pubs and nightclubs, to those voluntarily suspending or downsizing operations due to economic and social considerations, like hoteliers and car manufacturers, many expect to consume far less energy in the coming weeks and months than in a “business-as-usual” scenario.

Energy managers at businesses preparing for – or in the midst of – full or partial shutdowns, will need to consider, among other logistical factors:

• Whether some equipment will need to be put on a timer, rather than turned off entirely, to ensure it will operate effectively once operations resume.
• Which automated systems will need to be changed; and if you are using AI or machine learning, you may wish to pause it now to avoid skewing findings over time.
• Whether any staff will be on-site at any point: and, if so, what their need for heating, lighting or air conditioning will be.

3) Engage your electricity and gas suppliers ASAP

Suppliers will no doubt be dealing with multiple domestic and business queries at present, covering all manner of issues.

But, as Inspired Energy’s director of public service and policy Georgina Penfold told listeners duringedie’s most recent webinar, putting your own queries to these firms now – rather than later – is essential to ensure you are prepared for cost changes.

This is particularly true if any of your organisation’s contracts have a “take or pay” clause, Penfold explained. Your suppliers may be willing to alter this clause or provide other favourable changes, given the situation – but should not be relied upon to make these changes automatically.

4) Pivot your employee engagement schemes

For three quarters in a row, behaviour change has topped the list of challenges for respondents toedie’s Business Barometer for energy professionals – and the last edition concluded that employees are the audience which represents the most sizeable engagement challenge.

This challenge will no doubt be compounded by the fact that many businesses will see an uptick in remote working. You ultimately cannot track staff energy use at home in the same way you can on-site, and you may have invested in communications such as in-office posters.

Behaviour change specialist and Hubbub co-founder Trewin Restorick cautioned, however, against the complete suspension of existing staff engagement schemes, given the wellbeing benefits of continued routines and of partaking in collaborative efforts.

In order to pivot existing schemes for domestic settings, he told edie, professionals should highlight the cost, community and wellbeing benefits of efficiency – as these factors are now likely more top-of-mind than environmental considerations for most. More advice on posing behaviour changes as positive for individual employees can be found in this article.

If you are using a third-party behaviour change scheme such as JUMP by Green Rewards, now is likely a good time to reach out and see how the provider can help change your approach.

5) Explore potential impacts on domestic energy costs

A new report from USwitch states that the UK’s collective weekly energy bills for domestic users are likely to be up to £52m higher now than in 2019, as around 16.8 million people are working from home.

The average Brit working from home, the analysis claims, will use 25% more electricity and 17% more gas per day at home than on a usual working day, adding £16 per month to their bills if they are on a standard variable tariff.

The UK Government last week unveiled a series of principles agreed with all energy suppliers to support customers, particularly the vulnerable, if they are unable to pay their bills due to a loss of earnings. Energy managers may wish to remind staff of these principles or to go above and beyond them by collaborating with the CSR team and the board to develop further support mechanisms.

6) Develop future plans to pitch for up-to-the-minute digital systems…

With budgets slashed, financial outlooks altering and hopes of policy certainty on issues beyond Covid-19 dashed, now is probably not the opportune moment to ask for boardroom buy-in for new technologies.

But, anecdotally, edie has heard from a swathe of energy professionals in recent days and weeks who have been unable to work fully remotely – because their organisation’s offices or other facilities do not have digital energy management systems which can be accessed remotely. They are, therefore, facing a choice between compromising the effectiveness of social distancing measures or wasting energy.

Once business operations resume, these anecdotes – compounded by the fact that boards will likely be looking for quick wins in terms of cost saving and climate action – will improve the business case for modern energy management technologies.

7) … and clean, local energy

“Global oil and gas markets are facing an unprecedented situation: demand is collapsing because of the impact of the coronavirus while supply, already overabundant, is significantly increasing,” the International Energy Agency (IEA) stated in its last email to supporters.

The current drop in demand, for many fossil fuel majors, adds to climate pressure already being heaped on by investors and campaign groups. As a result, several of these businesses have told the IEA they are planning to diversify their portfolios, increasing investment in solar and wind generation, hydrogen, electric vehicle (EV) technologies, energy storage and/or carbon capture and storage (CCS).

For businesses, this, compounded by the fact that most developed nations are facing pressure to embed renewable generation and supporting technologies into their rescue plans, means there are likely to be more clean energy investment opportunities in the coming years.

Given that Brexit transition talks are still expected to be finished by the end of 2020 and that much of the sustainability conversation at present is centred around local economies and community work, these investment opportunities, in the UK at least, are likely to be particularly pronounced on a local level as they emerge. Now may be a good time to research the practicalities of each form of opportunity – from onsite arrays, to community projects, to Power Purchase Agreements (PPAs) – for your organisation.