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UTILITY WEEK | 29TH APRIL - 5TH MAY 2016 | 21 Operations & Assets 75% Proportion of generation that the Climate Change Committee recommends should come from low carbon technology 50% Proportion of time National Grid will rely on demand-side measures by 2030 175 Number of UN member states that signed the Climate Change Act in Paris last week "The power sector in 2030 will look profoundly different. The past five years have seen profound change and the next 15 will be no different." Ben Caldecott, director of the Sustainable Finance Programme at the University of Oxford Retail revolution The utility retail sector could look very dif- ferent in 2030 from now, with new entrants, new technologies and a potential shift in emphasis for the businesses. A Lazarus report assess the potential change in the energy market and states a change in focus is likely for the traditional suppliers. Centrica is highlighted as "the best-placed UK utility to lead the transition to service provision", with its British Gas Services business, which provides boiler cover among other services. The shift from being a sole commod- ity provider to a service provider is also a view shared by David Tuohy, senior vice president at energy services management firm Tendril. "There is the opportunity to rethink what is logical to expect from an energy company," he tells Utility Week. "There is an opportunity for brand expansion because there will be no difference between a com- modity supplier, a service provider and potentially providing solar panels – they will all be part of the same company." There is also the expectation that the likes of Google and Amazon will look to enter the utilities market; these technology giants have already made tentative steps with the development of the smart thermo- stat and energy storage solutions. Tuohy adds that these, and other entrants, may offer a one-stop solution to customers, whereby their utility, telecom and TV demands are met by a single com- pany, with this model taking up a "significant proportion" of the market. However, he believes the traditional utility company will continue to have a role because customers may seek a "best in segment" supplier, rather than a single service provider. Within the water sector, competition could be long established, with non- domestic competition into its 13th year, and household competition potentially in its second decade. For the water companies, the retail price – at least on the non-domestic side – could be set by the market, with Ofwat chief executive Cathryn Ross recently suggesting this area could be deregulated once the market has become established. Key numbers C oal-fired generation is set to be com- pletely off the system by 2030, while new low carbon generation – poten- tially including new nuclear projects such as Hinkley Point C – should be on stream as the UK seeks to hit the 100g of CO2/kWh target. The transition to this low-carbon energy mix will result in the sector looking substan- tially different from how it does today. Renewable generation will have under- gone continued growth and will, according to Ben Caldecott, director of the Sustain- able Finance Programme at the University of Oxford, be "completely dominant". This is also likely to feature the use of green gas, which will help to meet the con- tinuing demand for gas for heating and cooking, while reducing carbon emissions. Mike Thompson, head of carbon budg- ets at the Committee on Climate Change (CCC), told Utility Week: "We need to move to a point where the majority of power, about three-quarters of the energy mix, comes from low carbon technology." Thompson added that, to improve system management and deal with the issues of the variability of renewables generation, storage and demand-side response (DSR) will play significant roles. "There is a lot of scope for DSR, and it will be on a much larger scale," he said, add- ing that DSR could be implemented across households and non-domestic customers This chimes with a comment from National Grid's head of commercial opera- tions, Duncan Burt, who told Utility Week that Grid will rely on demand-side measures for "well over 50 per cent of the time" by 2030. Storage is also expected to have under- gone significant growth by 2030, helping to fulfil generation roles via pumped storage meeting peak demand, managing network frequency, and helping distribution network operators to manage the high levels of dis- tributed and renewables generation that are predicted to be on the system. However, to achieve this growth in stor- age, Simon Roberts, chief executive at the Centre for Sustainable Energy, says regula- tory changes are needed and should have been implemented by 2030. In the water sector, the wholesale changes revolve around the introduction of the com- petitive market. Water trading between com- panies could be in place – something that CCC chief executive Matthew Bell believes should happen. There are also further upstream reforms that should be well established by 2030, including in the sludge market, while other areas within the sector may be opened up. Ofwat chief executive Cathryn Ross has said: "The sludge market seems to us – and indeed to some of the companies who are at the cutting edge of sludge treatment – to have real potential for value creation." She also called for the sector to "think broadly" about resilience and how it treats wastewater. Wholesale markets transform GROWTH OF RENEWABLE GENERATION CAPACITY. CENTRAL DEMAND SCENARIO Generation capacity (GW) Offshore wind Onshore wind Tidal stream Tidal range Wave Hydro (run of river) Hydro (reservoir) Solar PV Geothermal Biomass Source: Garrad Hassan