Disruption and innovation are buzzwords in the energy world. The traditional model of the energy market is breaking down. For social housing providers this creates opportunities as well as challenges in providing the best proposition for customers and investors. We briefly outline here just some of the current key developments:

Heat and CHP networks

Heat networks, and combined heat and power (CHP – where electricity is generated at the same time as heat) have long been common in other northern European markets. With increasing options for selling excess power into the public grid and potential for decarbonising both heat and electricity, such schemes are rising-up the agenda in the UK too; they are often a de-facto planning requirement.

The end of passive consumers and the protection of the vulnerable

A retail energy price cap is already in place for vulnerable consumers and will soon be extended by primary legislation. There is increasing political and regulatory will to see certain groups of energy consumers protected and supported.

At the same time, alongside the roll-out of smart meters, business models are emerging which allow individuals and communities to engage with the energy market in new ways. For example, community energy schemes in which residents generate and trade power directly between themselves, as well as selling it in to the grid; invariably these schemes have social and environmental goals at their heart.

Embedded generation and demand side responses

Increasingly small-scale generation is connecting to the grid, so that individuals and groups sell as well as purchase power. “Demand side response” is becoming mainstream as technology develops that allows consumers to switch-off in response to a financial incentive at times of peak demand. Batteries are beginning to help manage supply and demand on large and small scales.

The potential impact of electric vehicles has been reported in the press. At a local level, the need for charging points and the potential for managing charging (or taking power from car batteries) will become more important.

Schemes for the “greening of gas” are emerging, often at the level of individual developments, to de-carbonise the source of most domestic energy consumption.

New regulation?

The Competition and Markets Authority recently highlighted how heat networks can lock-in residents/consumers to long term contracts in which they pay more for a poorer service. CMA called for new regulatory arrangements.

More generally, regulators are pondering how regulation needs to change to facilitate innovation whilst protecting consumers and creating a de-carbonised but reliable energy network. It is easy to see how property developers and providers of social housing might be impacted by any such changes.