It may be because the daffodils are looking fantastic, and it seems to have finally stopped blowing and raining, but it feels like spring is in the air. It could also be that after quite a dismal 2019, there is finally a tangible sense of forward momentum in the energy markets.
From a government perspective, whilst frustrations still abound, rumours about the publishing date of the mythical 'energy white paper' indicate that we may soon be put out of our misery. COP26, Zero Carbon targets and north/south divide are all helping drive government focus into the energy and heat markets- helped of course by slightly less pre-occupation on Brexit. The welcome, and overdue, announcement this week that solar and onshore wind can come in from the cold and play in the CfD market again, will give a real boost to potential investment. Even if the money available for CfDs is limited, the shift in policy itself gives strong market signals. Investment in EV infrastructure and products have had a similar boost, whether the shift to all EV is achievable by 2035 (or earlier) or not. Heat is another big one, with the market anticipating (or at least hoping for) real direction this year- and the recent consultation is a good start in showing intent to move barriers to the growth of heat networks. Hosting COP26 is a genius move, as the government will definitely want to be showing leadership in policy, even if the organisation may have gone a bit awry- so it is reasonable to expect more in the run up to November.
We are now seeing, by the day, businesses and organisations announcing new ways of reducing carbon. And like spring lambs, the market is likely to enthusiastically follow the innovators, creating momentum and jobs. Equally, whilst infrastructure investment came to a juddering halt following the closure of incentive schemes and changes to embedded benefits, it seems to be building confidence in a merchant led, subsidy free world.
The retail markets remain incredibly tough- but there is tangible progress by many organisations in developing new products, propositions and models that will not only bring valuable customer benefits but also essential new profit streams. OFGEM's relaunch of its innovation sandbox, whilst still treated with some scepticism by many, shows real intent to allow some flex away from the old world.
Spring optimism abounds- and even the threat of Coronavirus is driving stock markets and capital into the 'safe' ports of utilities. We will need energy even if we can't travel anywhere. It's been a long time coming, but finally it feels like the market is starting to motor.
EnergyBridge helps businesses, investors and local authorities navigate complexity, unlock value and reduce carbon in the UK energy market with a combination of deep market and operational expertise and experience. Contact: jo.butlin@energybridge.co.uk; 07464 949975