Energy Outlook 2017

25 January 2017 vivien.boidron
Energy Outlook 2017

As 2017 commences, the time for large energy users to strategise and plan the year ahead is here. 

Successfully negotiating today's complex energy landscape demands deep understanding of policy, combined with objective planning that aligns opportunities with business priorities.

To help, Endeco Technologies, a smart energy expert, is launching a series of regular horizon outlook, providing your 'go to' resource for futureproofing your firm's energy through the coming year.

Endeco Technologies Energy Outlook 2017

Energy prices; Q1 2017

'Energy and raw materials are the start of the global production chain,' writes the Independent

'They affect everything that happens afterwards. We go into the year with a rising oil price, thanks to production curbs in OPEC. That will pull up all energy costs, which in turn will tend to pull up all other prices.

'Big business likes stability, and it does not expect that in 2017. Politics is, of course, unusually unstable, but so too is the impact of technology and the cost of energy and basic raw materials. So it is set to be a difficult year.'

And, Reed Business Information reports the ICIS Power Index Q4 2016 analysis shows UK energy values have risen to their highest levels in 18 months.

'UK wholesale energy market prices have continued to climb in Q4 2016, prompted by concerns over gas storage levels and tighter power margins.'

 

Brexit and future policy

The Telegraph writes that Theresa May intends to trigger Article 50 by mid-March 2017, and kickstart the UK’s Brexit formalities.
 
Energy professionals are hinting that 2017 is therefore likely to lock in the direction of travel in the policy landscape for many years to come.
 
“It is essential that we grasp the opportunity to accelerate the transition to a low carbon, resource efficient and sustainable economy,” IMEA’s Chief Policy Advisor, Martin Baxter, told EDIE.
 
One of the most important parts of this year's energy pathway is the Government’s new Industrial Strategy Green Paper, launched on 23rd January 2017, which could embed this low carbon transition.
 
The Telegraph said the Strategy is, ‘Pledging to develop new technologies across the country and make it easier for companies to do business in the UK.’

For the low carbon sector, the Industrial Strategy Green Paper could be huge news. A £4.7 billion fund to pay for research and development into smart energy technologies is said to be central to its aims. Energy storage, smart grids and demand response all feature.
 
One of the questions posed in the Green Paper is: ‘How can the Government support businesses in realising cost savings through greater resource and energy efficiency?’

The Government appears keen for responses, which will feed into the next iterations of the Strategy and, ultimately, to where taxpayers money goes.

It means that every large energy user should have both their position, and their advocacy team ready. If Brexit policy changes can somehow 'dig in' a solid position on sustainability and energy, the benefits to industrial energy users and the environment will be huge.
 
The Conservative's planned position on energy, whether deliberately or not, still remains largely hidden, with Brexit immigration feuds dominating day to day business. The Paris Agreement, ratified in 2016, offers hope for sustainable and affordable energy, but the playing field is far from certain.
 
Large companies must therefore drive the Tory agenda and force the right response from a historically pro-business, pro-environment party, that presently seems lost at sea, struggling for air on the Brexit dilemma.

 

Carbon Reduction

EDIE also notes that Clark, and other members in the Department for Business, Energy and Industrial Strategy (DBEIS) have confirmed that the carbon emissions reduction plan will be released in early 2017, with February acting as a potential deadline. 

Endeco Technologies will keep an eye on proceedings, keeping you informed of the key moves. The plan must outline how to meet post 2020 reduction targets as well as how to achieve the fifth carbon budget’s goals for 2028-32. 

As such, it's a huge piece of work. Were the plan to encompass solid, strategic policy on energy, using the advantages of Brexit to drive an even tougher stance on sustainability, then serious implications for energy could be on the way. 

A lot will depend on The Great Repeal Bill, which The Independent writes will instantly annul the 1972 European Communities Act (ECA), which gives EU law instant effect in the UK, and give Parliament the power to absorb parts of EU legislation into UK law and scrap elements it does not want to keep.

This is absolutely critical. Has Theresa May's Government actually thought about which laws it will keep or scrap? Or, caught up in the political firestorm that is Brexit, will the Bill simply focus on immigration laws, and leave Europe's legacy, on environment and energy for example, intact?

So doing would be no disaster; EU policy on energy is progressive. But done correctly, Brexit could take that starting point and run further; assuming a world leading stance on progressive, sustainable energy law. EDIE says that the Committee on Climate Change (CCC) has already revealed most companies it has spoken to want EU laws retained post-Brexit. 

The coming months truly have much to deliver, and many opportunities to fulfil. Remember, Greg Clark is already on record:

“The Paris Agreement sends a clear signal that cutting emissions globally will not only help countries respond to the impact of climate change, but it is also compatible with economic growth.

“As we ratify this landmark agreement, we look ahead to continuing our leadership on climate action and ensuring that British business continues to play a key role in this new global low carbon economy. It will benefit the UK while we implement our industrial strategy to deliver the economy that works for all.”

Here's how you can, and should advocate and hold him to account on energy policy:

Contact the CCC

Government Energy / Industrial Strategy Consultations