The Cost of Polluting Power

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Last week, the UK’s energy regulator, Ofgem, announced that it will increase the energy price cap by 54% from April 1st. This change will see the bills of default customers and prepayment tariff customers rise by around £700 per year. It follows a turbulent 12-month period that has seen a four-fold increase in the wholesale price of gas and a wave of UK energy suppliers representing over 4 million UK customers going bust.

This spike in gas prices has been driven by a combination of factors, including an uptrend in demand as the world tentatively emerges from the COVID-19 pandemic and begins its return to normality. In the midst of what is being widely dubbed an ‘energy crisis’, it’s easy to forget the larger crisis: that the cost of our energy and the price of gas are correlated at all.

Currently, around 85% of the UK’s homes are centrally heated with gas, which generates between one third and one half of the country’s electricity. This reliance on gas and fossil fuels leaves UK consumers particularly vulnerable to volatility in the wholesale market. While the short term solutions for targeted support aim to alleviate some of the burden for the most vulnerable customers, the only effective long term protection against market volatility is decarbonisation.

Decarbonising the energy sector is not an easy task. One of the major benefits of Combined Cycle Gas Turbines (CCGTs) is their ability to change their power output from 0-100% in 30 minutes. This means that the supply side of the energy sector can react in near real-time to changes in demand, a feat that cannot be matched by any form of clean energy. To remove such a flexible and reactive power source from the UK’s energy landscape without a viable replacement while demand is predicted to increase by 100% by 2050 threatens nationwide power cuts and supply issues.

The unfortunate reality is that fossil fuels are deeply embedded in the world’s economy. Removing them without widespread disruption for consumers would require a revolution in the energy sector on a scale that has not been seen since industrialisation. The energy sector in a post-carbon world would be unrecognisable to the one we have today, which begs the question: What does a post-carbon energy sector look like?

This is what we’re answering at Farad.AI. In their Digitalisation Strategy for Net Zero, Ofgem, Innovate UK and BEIS write:

“Our success in achieving net zero will rest on a decisive shift away from fossil fuels to using clean energy. This will require harnessing energy from low carbon sources to power our homes, businesses, and vehicles. To meet this challenge, millions of low carbon technologies – including solar panels, battery storage, heat pumps and electric vehicles – will need to be seamlessly integrated onto our electricity networks. Variable renewable electricity from the sun and wind will need to be balanced, second-by-second, with demand from our heating systems and cars. Smart technologies such as battery storage and smart heating systems will be deployed so that low carbon power is available in the right places and at the right times to meet our energy needs.

This will require an enormous step-change in the system’s ability to understand and react to its increasingly complex energy flows. The success of this step-change relies on the digitalised exchange of data to facilitate an energy system which can accelerate, automate, plan, and anticipate processes far better than at present.”

They’re not the only ones who see widespread data exchange as the cornerstone of an intelligent post-carbon grid. The World Economic Forum estimates the value of digitalisation in the energy sector to be $1.3 trillion worldwide. As the realities of decarbonisation become apparent, it’s clear that the grid’s future is built on data.

At Farad.AI, we are building the digital communication highways for data exchange in an intelligent grid. Together with Innovate UK, BEIS and Ofgem, we have helped to pioneer data standards and improve data accessibility, allowing the UK to maintain its world-leading position in open access energy sector data. Our award-winning flagship product, Compass, is the first iteration of a technology platform that brings data to the forefront of the energy transition in an effort to accelerate decarbonisation while minimising the impact on consumers.

Our work brings together cutting-edge developments in Graph Theory and Machine Learning to modernise the way we track the health of our electricity grid, identify new connection opportunities, reinforce and upgrade our network and minimise operational costs. Our machine learning models allow the grid to predict the time and location of peaks in demand and deficits in supply to give consumers and system operators security from disruption. Simultaneously, our power flow modelling tracks the impact of demand through the network to optimise the way we use our infrastructure and minimise the cost of reinforcement.

Our team is continuously working on medium and long-term product releases that fully utilise the multitude of applications of the Farad.AI platform. Our ultimate goal is to minimise the cost of power for end consumers by providing the global economy with a Compass for navigating towards net-zero.

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