Tag: electricity

The Case for Diversification

2 April 2026

Opinion
A resilient energy system demands multiple sources of power generation, flexible assets that can rapidly respond to spiking demand and supply-stabilizing storage technologies.

This article first appeared in Energy Intelligence

At the onset of the war in the Middle East, global energy markets reacted instantly. Oil prices surged and gas markets tightened, bringing the risk of renewed cost pressure for consumers and industry into focus. In many power markets, gas-fired generation still sets the marginal price of electricity, so when gas prices spike, electricity prices tend to follow. For the UK, a nation overly dependent on natural gas, this is a familiar dynamic following the shockwaves from Russia’s invasion of Ukraine. Meanwhile, the price of gas in the UK — which imports a large portion of its supply — surged by almost 25% following strikes on critical energy infrastructure in the Middle East. These events expose structural weaknesses in modern energy systems. The risk of disruption has long been visible — in geopolitics, supply concentration and infrastructure constraints — and it has been consistently underestimated.

For decades, countries have optimised for efficiency under normal conditions, focusing on low-cost generation, streamlined supply chains and just-in-time delivery. In doing so, systems have been left with limited shock absorbers.

When disruption hits, there is little buffer — only pass-through cost.

The impact is not just being felt in household bills. For energy-intensive industries, this volatility increases uncertainty, which can delay or deter investment. For governments, it translates into fiscal strain and heightened political exposure. For economies, it erodes competitiveness at the margin.

Pricing the Shock

High energy prices are damaging, but unpredictable energy prices can be worse.

The challenge of this unpredictability is even more acute as global electricity demand from data centres accelerates. Data center power demand could increase to 945 terawatt hours by 2030, more than Japan’s total electricity consumption.

Electrification, industrial growth and expanding digital infrastructure will further accelerate power demand. In this context, reliable and affordable power is nonnegotiable; it’s a prerequisite for growth and security.

Geopolitical challenges are increasingly being seen as a structural feature of the energy landscape, not episodic, and the 2020s are a clear lesson for energy security: The risks were always present, and the system hasn’t been designed to absorb them.

Security Trumps Decarbonisation

At CERAWeek this year, that reality was front and center. Across discussions with industry leaders, policymakers and investors, one theme came through clearly — the era of single-solution thinking is over:

  • Decarbonisation, while still an essential part of the conversation, is taking a back seat to energy reliability and affordability.
  • A diversified portfolio approach is progressively becoming the new default.
  • Power demand is a landscape-shaping force that favors flexibility.

Taken together, these shifts suggest the conversation is moving away from focusing on how to decarbonise energy systems toward how to make them durable, recognising that when reliability and affordability come under threat, sustainability is often deprioritised. Without a more holistic approach to balancing all three, we risk repeating that pattern and exacerbating the climate crisis.

Markets Redefined

This shift has profound implications for economic competitiveness. Markets with stable, reliable and affordable power systems will have a decisive advantage.

Those without could face higher costs, slower growth and reduced investment. Energy policy is, in effect, becoming inextricably linked with industrial policy.

Recent geopolitical crises have punctuated the need to avoid replacing one form of dependence with another; instead transitioning toward building energy systems that are more resilient by design. Today, that means diversification.

A resilient energy system demands multiple sources of power generation, flexible assets that can rapidly respond to spiking demand and supply-stabilising storage technologies. No single source can deliver consistent performance across all conditions, so a diversified mix ensures that when one becomes unavailable or costly, others can step in to maintain supply and limit price volatility.

In the wake of the latest energy shock following the war in the Middle East, inadequate long-term planning has left politicians concerned about pricing and rushing to mobilise short-term solutions — some of which could come at the expense of efforts to progress the energy transition, which risks undermining a truly resilient system long term. For example, some European countries called for quick reform to minimise the EU Emission Trading System’s impact on power prices, while others called for a full suspension.

One outlier in Europe is Spain, which saw renewable energy capacity rise to 57% of the country’s electricity mix in 2025. Spain has added over 40 gigawatts of solar and wind capacity since 2019.

As a result, gas sets electricity prices for a significantly smaller share of the day — around 15% — reducing exposure to global gas price volatility relative to other European markets.

On the other hand, the UK’s experience illustrates the cost of limited diversification. Despite rapid growth in renewables, wholesale power prices remain heavily exposed to gas, a dynamic that has contributed to some of the highest electricity bills in Europe.

Operators are increasingly responding by building more balanced portfolios that combine generation, storage and flexible assets to manage volatility. Drax’s own portfolio, spanning biomass, pumped storage, battery systems and open cycle gas turbines, reflects this shift, providing dispatchable power and system services that help stabilise the grid when supply tightens.

Resilience by Design

Designing for resilience requires a shift in mindset. Disruption should not be treated as exceptional, but as inevitable. The goal is not to predict the next shock, but to ensure the system can withstand it.

In a more volatile world, resilience is becoming the defining measure of energy security. The countries that succeed in the next phase of the energy transition will not be those with the most generation capacity but those with systems designed to endure disruption.

Ross McKenzie is the chief corporate affairs and sustainability officer for UK electricity generator Drax Group. The views expressed in this article are those of the author.

‘3D’ to drive an energy revolution

Jonathan Kini, CEO Customers

1 February 2019

Opinion

Think of the phrase ‘3D’ and may people instantly think of video games, television or cinema, along with the special glasses you needed to watch it.

But another form of 3D is, I believe, going to be at the heart of the energy revolution which is rapidly gathering place.

The three Ds in this case are Data, Diversification and Decarbonisation. Together, they will transform the way businesses buy, use and sell their energy, help companies take control of their energy use and save money and also play a key part in our journey towards a zero carbon, lower cost energy future.

We’re already seeing some real innovations in the energy sector. Our trial of a storage battery with a customer of Opus Energy is an example, offering a farming business in Northampton the chance to sell stored energy generated by solar panels back to the grid at times of peak demand – a potential new revenue stream.

But other innovations and advances will maintain the pace of change and data will be at the core of this now the new generation of smart meters are being installed in businesses, revolutionising customer relationships with their energy suppliers.

The data from the new meters will finally give customers insight into where and when they use energy. Suppliers will have to work much more closely with customers to help them access new opportunities for cost savings, access to new markets and even new revenue streams.

An example would be a restaurant. With the data smart meters will provide, the restaurant’s supplier will be able to tell the owners how their energy use compares to the local competition and where improvements can be made.

The detail could go as far as identifying whether the restaurant’s equipment is older and less efficient, whether rivals have installed newer kit or whether other businesses are switching off their equipment earlier or using it at different, cheaper times.

Using energy during the peak weekday morning and early evening hours is often the most expensive time to do so. Data will give businesses the insight into how they can use energy more efficiently and when they use it, offering them the chance to avoid buying at peak times whenever possible and driving efficiencies.

This is why Haven Power’s trading team is now working closely with GridBeyond. The partnership allows our customers to trade the power they produce as well as optimise their operations to help balance the grid at times of peak demand. The really smart thing is that in doing so, customers are reducing their energy costs and making their operations more sustainable.

Trading desks at Haven Power’s Ipswich HQ

The way demand changes and is managed by businesses and consumers on a diversified power system will also be key. The business energy sector is already diversifying as many customers are able to generate and store their own power but the next step is for more customers to be paid to reduce their usage at peak times.

Think of a busy time for the National Grid – half time in the FA Cup Final or after the results in Strictly Come Dancing. Previously, the grid would have to pay a power station to ramp up generation to meet demand but these days, customers are paid to reduce demand for 30 minutes or so – in effect becoming a huge virtual power station.

This has happened for some time of course with larger, industrial customers but now, smaller companies can benefit from this too, thanks to the data and insight they will have from their smart meters. This empowers customers and puts them, not the energy companies, in control of the key decisions about their energy.

A close, advisory relationship between energy suppliers and their customers will become ever more important to make sure business can choose to avoid the high demand periods, and maximises use during the lower, cheaper times. In fact, I can see a time when customers will end up paying more for insight and advice than they do for the power they buy – and they’ll save money overall in doing so.

And if we get all this right, it will help drive one of the most important of the three Ds – decarbonisation.

Sustainability is increasingly becoming a primary focus for businesses and demand for renewable energy is growing because it is now cost-effective. That will help us in our drive towards a zero carbon future as more and more renewable energy comes onstream, though the UK will continue to need power generated from more flexible assets as well.

So there are huge opportunities out there to transform our energy landscape but they have to be viewed positively. The smart metering programme can be viewed as a regulatory burden or it can be seen as an opportunity. We take the positive view.

Likewise, batteries were once the preserve of massive companies only but now, as technology develops, they are becoming available for smaller firms too. The more we can innovative on a larger scale, the more the technology will work its way into smaller markets too, adding momentum to the energy revolution.

The opportunities are huge. If we get it right, so too will be the benefits to one of the biggest priorities of all – the work to decarbonise the UK and create the lower carbon future we all want.