The Power of Tomorrow: Top Trends to Watch in Energy and Utilities in 2023
In the wake of a tumultuous 2022, the UK energy and utilities sector is set to remain a major focus in 2023 as it navigates a complex landscape of intersecting environmental, economic, social and technological challenges. With the need for further change and disruption to the market becoming increasingly unavoidable, here are the key trends to keep an eye on in 2023.
Tension continues between tackling climate change and ensuring security supply
Positively, growth in renewable energy sources will continue as more projects come online. However, investments are expected to slow as the cost of financing increases and the economy enters a recession, and overall efforts to decarbonise will remain under pressure by the near term need to ensure the security of our energy supply. The security of the UK’s water supply will feature more prominently in 2023 as climate change and efforts to balance supply and demand, necessitates limits to consumption and impact pricing.
Decentralisation will increase
Driven by environmental fears and concerns relating to the security of supply, the public’s response will shift to increased action. This will lead to further decentralisation of the UK’s energy and water infrastructure. In the energy sector, this will manifest as the deployment of more local and personal generation and storage systems. For the utilities sector this will result in more early adopters experimenting with personalised water systems, whilst the water companies’ continue their work to deliver greater value to their customers, society and the environment.
Importance of Data and Artificial Intelligence will grow
As the industry works to solve the challenges of climate change, decentralisation and balance supply, organisations throughout the industry’s supply and value chains, will seek to unlock more of the potential capabilities that data and artificial intelligence offer. Through an increased use of data-driven decision making, digital twins, and intelligent asset management, data and artificial intelligence will provide opportunities for genuine innovation and are also expected to play a more critical role in ensuring the availability of supply to the UK’s businesses and households.
Is the time finally right for Hydrogen?
It’s been suggested before, but with greater investment and use, the technology for making green hydrogen will become much cheaper over the medium term. Delivery of hydrogen in 2023 will increase as the UK’s existing gas pipeline is further utilised to supply more homes with hydrogen as a replacement for natural gas. Awareness of some of the further benefits of using hydrogen, such as its ability to store excess energy created at specific times through renewables (avoiding batteries) and then being easily converted back to electricity when required, or used to power cars and other forms of transport, will increase in the public’s consciousness.
Customer behaviour and consumption will change
Customers feeling the pressure of price increases and cost of living rises, will focus more on managing consumption and minimising spend. This will stimulate demand for more flexible tariffs. In response companies will need to be more innovative in how they seek to manage demand and charge for the supply (and in the case of water – the disposal) of the critical commodities they provide. Following trends in other European countries, the bundling of services with other goods or services (both inside and outside of the industry) is expected to evolve as a way of increasing customer loyalty and promoting lock-in.
By the end of 2023, it will be interesting to look back and evaluate the progress which Britain has made, as we seek to digitise the energy and utilities sector, and fulfil our obligations to protect customers, society and the planet.
At times it may be tempting to feel as though the status quo isn’t too bad after all, or perhaps that there is no clear next step, or that we need to wait for others to do something first – but these are issues faced by every change. It is only through continued dialogue and action that we will bring about the industry-wide transformation required and collectively look forward to a better future.
2023 will perhaps be a small stepping stone in this journey, but I sense that it will be a very important one.
By Ben Scott, Principal at Netcompany