How renewable investment is shaping the future of energy

Today is Energy UK’s annual conference, where leading industry figures meet to discuss the future of energy.

It’s an important event, a forum for the many voices pushing for progressive change, including energy suppliers, generators, scientists, and MPs.

Our own expert, Simon Pickett, Investment Director at Octopus Investments, is on the Finance panel with Sir Ed Davey (Mongoose Energy), Tony Cocker (E.ON), and Alex Germanis (Pure Leapfrog).

Simon will explain how investing in smart, clean technologies will not just save us from the effects of climate change, but help establish a flexible and responsive energy system that enhances sustainability, affordability, and energy security.

I spoke with Simon to get a better idea of what the conference means for customers, suppliers, and the industry as a whole. Read on to find out more.

Hi Simon. Could you tell us a little about what you do?

I’m an Investment Director at Octopus Investments. I’ve been with the company for about six years, helping build a £2bn portfolio of distributed, clean electricity generation assets – including solar, onshore wind, biogas, biomass, landfill gas, and efficient gas peaking plants. As a passionate supporter of renewables, I think a lot about where the energy industry is today, how it could be improved, and where the future of energy really lies. The question I always ask myself is: what seems visionary today, but tomorrow could become unremarkable?

The energy industry is at an inflection point. There is a global momentum already determining our future, so my job is to invest in a way that is adaptable to a more innovative and rapidly evolving marketplace. That includes smart, networked, renewable technology that keeps the lights on without costing the earth.

Why is renewable investment so important?

There are several answers to this, but fundamentally it’s about meeting the needs of humanity whilst protecting our planet for future generations. We all know the planet is warming. We’ve seen the impacts of climate change on weather systems, polar ice, animals and plants. If we don’t do something about the carbon levels in our atmosphere these effects will worsen, and might be irreversible. The energy industry produced over a third of the UK’s carbon emissions in 2015 – so although we’re getting better, we’re not nearly where we need to be. It’s not about "going green" today, it’s about driving the transition.

Sustainability aside, renewables for me is also about energy access. Just like climate change, access to electricity is a global problem. Around 1.3 billion people have no access to electricity at all. These communities are often in rural areas with no grid connection – and connecting them via traditional grid extension is both expensive and slow. We might be on an evolutionary journey in the UK, but in developing markets there’s an opportunity to do it “smart from the start” – establishing localised renewable generation and storage technology to deliver cheaper, greener, and faster energy access.

Finally, it’s important to remember that the world has already started to change. As an investor, why pour money into a legacy system when there are better, future-proof, tech-led solutions already in our hands? We don’t want to be trailing behind the most advanced markets in the world, such as in parts of the US, when it comes to energy. We’re a nation of outstanding innovators, so let’s not only continue to innovate, but grasp the opportunity to commercialise when we need it most.

What do you consider to be the main financial challenges facing the energy industry?

The main challenge is uncertainty. I'm not talking about the uncertainty of exactly which new products and services will evolve – we can handle that. I mean uncertainty around the changes taking place in the political and regulatory environment, and the extent to which policy will support emerging technology. Innovation is happening at a rapid pace, and to get the most out of it we need a policy environment that encourages intelligent and scientific approaches to our energy needs.

With the right policy framework, we can deal confidently with the technical challenges such as intermittency, demand forecasting, inertia on the grid, and so on. Rather than continuing to throw more money at pre-determined winners, we need to attack them with science.

What can investment companies like Octopus Investments do to help us move to renewables faster?

By investing in smart, game-changing technology that helps the move to renewables. One such example is Reactive Technologies – they’re the first company in the world to successfully send data over long distances using the electricity grid. This brings national-level communication from a network that already exists, allowing much smarter demand forecasting and more efficient use of connected devices. It’s also much cheaper than trying to build mobile or wifi networks to do the same job.

We support technology that makes sense of the entire energy system, rather than focussing on just one part. Since everything is linked, it’s this holistic approach that will ultimately benefit the consumer – but we’ll need low-carbon, affordable, and future-proof technology to do it. In time, we expect an intelligent energy system to evolve that will learn and optimise at every level.

What role do you consider consumers having in the move to renewables?

Another passion at Octopus is providing all our customers with service that is second to none. This includes helping to understand the consequences of their buying decisions. We’ve already seen consumer behaviour drive demand for renewables and smart technology; it’s time to swing with that momentum to empower consumers to create positive change in the energy industry.

As individuals, consumers are like sand, but acting together, they are an unstoppable force. In terms of action then, we want to empower customers to switch to suppliers who have genuine green goals, and where possible, to green energy. It’s now affordable and for a few extra pounds today you’d drastically lower your carbon footprint and pave the way for much cheaper energy in the very near future.

How important is the role of government in the transition to renewables?

The government is crucial for creating the conditions in which smart, networked renewables can thrive, but it can’t solve the problem alone. Innovation is accelerating at phenomenal speed and we need a policy environment that encourages and nurtures this progress, rather than singling out one technology for support. Let science and markets decide which is best.