What has changed in the energy and sustainability sector, and what do you need to look out for? Trowers & Hamlins’ Energy & Sustainability team sit down to talk about how the market is evolving, what to watch for, and why the changing landscape makes for exciting opportunities and work.
How has sustainability changed in the last five years?
Chris Paul, Partner: Sustainability now has a clear voice at board level, it’s being considered in investment plans, and the risks are part of business decisions in a way they never were before.
Megan Coulton, Senior Associate: Energy has also become more critical to decision-making: How you procure energy, use it and reduce consumption. Rising energy costs in the last year have accelerated this step change.
CP: The rising cost of energy for business means the payback period for investment in measures like insulation, on-site generation and battery storage has really come down. And things that were nice to have are now actually business-critical.
What do businesses tend to overlook?
Rubianka Winspear, Senior Associate: The Government
is offering a variety of grants and financial incentives, such
as the Green Heat Network Fund and the Industrial Energy
Transformation Fund, to help fund the net zero transition.
These tend to be short-term opportunities, and businesses
need to be ready to respond to competitions.
CP: Climate change risk doesn’t get the same attention as
energy costs and net zero, but it will have a big impact on
business. It’s not just about flooding, droughts and heatwaves
in the UK either – businesses need to consider climate change risks across their entire supply chains.
MC: Everyone talks about setting targets, but compliance is
just one part; it’s a huge opportunity for businesses that can
navigate the transition and change.
What are the key changes in legislation/
regulations to look out for?
CP: Regulations around heat networks are coming into force
next year, and heat will become a regulated utility like gas,
electricity and water. Heat suppliers will need to be licensed.
It’s a real shake-up of the heat market, and we await clarity
on the legislation to fully consider the implications for both new
schemes and existing developments.
MC: There will also be heat network zoning where
developments are obliged to connect to the local heat
network, which local authorities will likely lead. We are waiting
on secondary legislation, but it brings in a European-style
model where you have true district-wide heat networks.
RW: The Government recently issued a call for evidence
on exemptions to the requirement to hold an electricity
licence. The current class exemptions are difficult for clients
to interpret, and don’t support more innovative models for
generation and supply. With the growth of financed retrofit,
it is likely that we’ll see more developments in the regulatory
landscape. So, there could be potential changes there.
What drew you to working in the energy
and sustainability sector?
Diana Lupa, Associate: It’s a sector that drives change; you
are dealing with the future, so it is a really exciting practice
area to be in.
Emad Mehra, Associate: Managing the transition to net zero
will take years, and it’s great to be able to help clients on both
strategy and delivery.
Hannah Giebus, Associate: It’s a sector that is evolving with
new legislation and technologies, and it’s exciting to be part of that landscape.
RW: Clients come to us with new models and ideas, and it’s
a chance to be involved in something that hasn’t been done
before.
CP: My degree was in geography, so I’ve always been
interested in the ‘E’ of ESG, and it’s a chance to bring that
together with the delivery of developments and infrastructure.
MC: It’s an opportunity to deliver on a huge scale, and no
project is the same.
What advance in sustainability technology
is the most exciting?
DL: Green hydrogen has the potential to have a significant
role in the way we transform our energy system, but there are
practical challenges. It is one to look out for.
HG: Decarbonising heat networks is an increasing part of
our practice. For example, we recently advised a developer
connecting to Islington council’s Bunhill Heat and Power
Network, which uses waste heat from the underground
network to provide low-carbon heat to the local area.
Technology is advancing to help create a circular economy.
EM: Solar isn’t a new technology, but with the recent energy
price spikes the demand is high. With improvements in
battery storage, it’s becoming an option that will have a wide
application.
CP: The combination of solar and batteries at an individual,
domestic level but also on a commercial level is a game
changer. At the moment, people can store energy, but that
excess supply can’t be coordinated and used by others. The
digitalisation of energy will help create virtual power stations
and that helps open up new revenue streams to fund the
transition. The future’s bright!
This article is part of our Responsible business newsletter - Energy and sustainability edition. To read the newsletter in full, please download it here.
