The annual event of the U.K.’s All-Party Parliamentary Group for Renewable and Sustainable Energy (PRASEG) that took place this week in London depicted the turbulent phase the U.K. economy in general and the British clean energy sectors specifically have entered. Innovative business models are the first to suffer, the event suggested.
A large part of the conference was dedicated to emerging, new energy business models and the transformation of the country’s energy landscape. Most presenters focused on the recent technological developments and the spill over to new business models, trying to irradiate a glimpse of hope. However, the conference discussion could not escape Brexit, while some participants focused specifically on the implications Brexit would have on the country’s energy business.
There is no doubt that on this front, the conference’s most vocal presentation came from Sara Bell, founder and CEO of Tempus Energy, an innovative utility that aims to deliver a lower cost energy system for energy users while still decarbonizing its generation sources. Tempus Energy, for example, is one of the stakeholders participating in the “Sunshine Tariff” project in the South West England county of Cornwall.
Bell was an advocate for the U.K. to remain in the European Union (EU) as the safest path to decarbonize its economy and build a sustainable future. Following Brexit, however, the path to the U.K.’s decarbonization and energy business innovation is seriously threatened, she argued.
“To persuade an investor to put money into an early stage innovation company requires them to take an outsize risk. And the reason you need to do that is because so many early stage innovation companies fail. That’s the reality,” said Bell.
“In a safe and calm environment that is challenging but possible. In the current environment [post-Brexit] it is going to be almost impossible to raise investments for innovation companies,” she added.
“In the last week, every innovation company I have spoken to has cut between 20% to 50% of their staff because they know they can’t fundraise.” Innovative companies cut staff to survive. And “this matters because if we want to move to a zero carbon system at the lowest price for the customers, we need every innovation company out there”, suggesting new business models, Bell told the Praseg conference attendants.
The move to a sustainable energy future will not come via the energy market incumbents, who most of the time block innovation because it works contrary to their own, established business model, Bell said. And she could back up have her arguments. “Nowhere is this more evident,” Bell pointed out, “than in the case of the capacity market, where incumbents protected their generation assets at the expense of their customers.” The capacity market is the U.K.’s subsidy scheme to support fossil fuel-based and nuclear assets to generate power and remain online.
Bell said that “we took legal action at the European Court of Justice (ECJ) to appeal at the state funding for the capacity market because it is an anticompetitive measure that subsidises coal assets, nuclear plants and diesel installations. But as a result of Brexit we will not be able to enforce any ECJ judgement and all of the UK electricity bill payers will be epaying for the capacity market subsidies,” she said.
Not that other presentations did not raise concerns about funding innovative and renewable energy schemes in this post-Brexit landscape. But Bell’s presentation was crystal clear that the current policies made in the U.K. do not favor the move to a decentralized reality. Instead, the decentralized trend in the U.K. is emerging mainly due to the technological improvements, new market entrants and an overall EU trend towards energy decentralization and digitization.