The return of Athens and Sparta, or the Rise of the Corporate State?

This blog was written by BSRIA's Henry Lawson

This blog was written by BSRIA’s Henry Lawson

For those of us who have been following the development of smart cities and smart government over the past few years, it has become more and more obvious that it is not only, perhaps not even mainly about the rapid advances in smart technology and the IoT. It is also about the social and political underpinning, who will control the developments and how far they will be allowed to go.

Recently we have seen a few useful straws in the wind. Last month, as some of you may have already noticed, the UK voted, by a narrow but decisive majority to leave the European Union. This will be the first time in its almost 60 years that the EU has contracted rather than expanded, and moreover losing its second biggest economy.

Partly in direct consequence, there is now a distinct possibility that Scotland in turn will leave the UK, which would leave the UK barely half the size physically than it was less than a century ago (prior to the secession of most of the island of Ireland). What is much less noted is how much more fragmented the world as a whole has become.

A century ago Europe was dominated by a few empires. Now, following the disintegration of the Soviet Union and the threatened fraying of the EU, there are a whole swathe of countries that either never knew an independent existence before or did so only transiently, especially in Eastern Europe. From Ukraine, Moldova and Belarus, to Croatia and Montenegro, Scotland could potentially re-emerge after 300 years followed perhaps by Catalonia. In the world as a whole there are almost 200 countries that can claim some degree of independence, and many more seeking it.

What has this to do with the way the smart world is organised? Quite a lot, actually. Evidence suggests that one of the things many people in the UK were voting “against’ was the power of global corporate forces that are moulding our lives, with Brussels seen as their eager collaborator. I Personally take a rather different view, that it is precisely corporate power, which is being reinforced by technological advances that means that if something like the EU did not exist, we would need to invent it, or perhaps more accurately, we need something that moves on from the original vision of the EU to reflect the more complex world that we are now moving into.

Business of course already operates on a global scale. The world’s most valuable corporation, Walmart – which let us not forget, also owns one of the UK’s leading supermarkets, would if it were a country, rank 26th in the world, just behind Belgium, and indeed ahead of 2/3 of the members of the current EU. If we focus in more on direct players in smart technology, Apple would rank 44th, putting it on a level with such a technologically sophisticated country as Finland. And Microsoft, which now only just makes it into the world’s top 50 corporations, makes more money than any of the 10 smallest EU members.

It seems obvious to me that, if such corporations are not to be dominating political decisions, as well as the technology, then a degree of cooperation between governments is needed, something possibly very like the EU, which has at least forced corporates like Google and Microsoft to sit up and take notice.

Another fascinating trend, that takes us perhaps in a slightly different direction, is the fact that so many of the world’s richest and most technologically advanced countries are in fact city states, or something very like it. According to the IMF, the top 10 countries with the highest per capita GDP, included six oil producers (no surprise there),  but also four that could be described as “city states” or something like it, namely Luxembourg, Singapore, San Marino and Hong Kong  – taken separately from the rest of China.

Now of course very small states have the option to attract business through tax incentives that are widely seen as underhand, in a way that simply is not feasible for larger countries. But what is also interesting is that both Singapore and Luxembourg have been to the fore in global smart city developments. There are clearly advantages where a government can focus on the needs of a city and its immediate surroundings and needs. Even in larger countries, cities and their regions are being accorded more power, or are demanding this.

And of course this is not a new trend. You can travel northern Europe, from Flanders to the Baltic States, and admire handsome cities that grew rich as part of the Hanseatic League, essentially a league of cities that dominated much of northern Europe’s trade for several centuries from the late middle ages onwards. Before that, the first major flowering of European civilisation, with huge leaps in philosophical and scientific understanding occurred in a scattering of Greek city states. And of course the discoveries, inventions and creativity of the Renaissance was cradled by Italian city states from Florence and Pisa to Venice and Mantua.

Linked to this, it perhaps tells us something that by and large, the UK’s biggest cities voted very differently in the EU referendum to the small towns and countryside, reflecting a different attitude. There’s a case for saying that Londoners, Parisians and Amsterdamers have more in common with each other in some ways than with their own hinterlands.

Could politics and technology therefore be moving us away from the old fashioned nation state, and perhaps away from massive continental alliances like the current incarnation of the EU, but towards alliances between small states and cities that have common interests and a common culture to protect?

One thing seems clear to me; if we want a future whether the major technology providers work for us, rather than one where we for them, then we need a major shake-up in the way the world is managed.

Construction Leadership Council – study into labour markets & off-site

This blog was written by BSRIA Chief Executive Julia Evans

This blog was written by BSRIA Chief Executive Julia Evans

Exciting times: leading on from BSRIA’s press statement issued on 3rd February: the Construction Leadership Council (CLC) has been asked to undertake a “major” labour market study by skills minister Nick Boles MP and housing minister Brandon Lewis MP.

BSRIA is encouraging member and industry input from to the accompanying CLC consultationconstruction industry labour model study

Evidence to: construction.enquiries@bis.gsi.gov.uk

Deadline: Monday 29th February 2016.

The CLC has invited Mark Farmer of Cast Consultancy (formerly Arcadis) to lead the study, culminating in a report for CLC’s consideration in the spring. It will both: reflect on the impact of the current “labour model” in construction and make recommendations for action by the industry and government to help overcome constraints on skills development and the sector’s capacity to deliver new homes and infrastructure.

In particular, ministers want to know whether there are structural issues and risks that diminish long-term incentives for smaller subcontractors, who employ the largest part of the sectors workforce, to invest in training.

As I said earlier this month: BSRIA is very much supportive of this commission and consultation and, on behalf of the industry and our members, wishes to be involved every step of the way. Such commission hasn’t come a day too late, especially with rising demand especially, but not only, in the house building sector.

Alternative delivery methods – such as off-site – with a fresh skills base and capacity to bring new entrants to home building supply chains signifies a “shifting focus”.

 The consultation requests:

  • Evidence of how the construction labour model and recruitment practices impact on incentives for skills development in the sector (including in the supply chain) and on the introduction of more novel techniques such as off-site construction.

Evidence on how the current model works – including:

  • What business models and other arrangements could better support skills and skills pipelines in the sector?
  • What measures could improve wider incentives for capacity investment and the introduction of new ways of working?
  • What are the barriers and enablers to greater use of off-site construction?
  • How could the range of participants in the UK housing market be broadened, including through the better introduction of institutional funds?

So, I urge “one and all” to take a few minutes to put “comment to keyboard” for this crucial study. Remember: little can change without your expert opinions!

Just when you thought it was safe to relax about Energy

This blog was written by BSRIA's Henry Lawson

This blog was written by BSRIA’s Henry Lawson

Did you hear about the crisis that hit the UK on 4th  November, causing  massive disruption, and provoking outcry in industry, and suddenly sent energy rocketing back up the UK’s political agenda?

You probably didn’t hear this, because the first major threat to the UK’s national grid this winter still left it with a princely 2% spare capacity, sufficient for the National Grid to issue a “notification of inadequate system margin” (NISM), but insufficient to actually disrupt the service.

While this was only the first stage of alert, and while an abnormal lack of wind was an aggravating factor – bringing the UK’s now significant wind generation capacity almost to a halt, one of the mildest starts to November on record may have helped to save the day. As so often in human affairs, a “near miss” is treated as a near non-event. A single “hit” on the other hand could have major repercussions, prompting much more urgent action not just on the resilience of the UK’s national grid, but on how buildings respond to peaks and troughs in energy demand.

BSRIA has been reporting and analysing on Building Energy Management and the issues around it for a number of years now. One of the trends that we have noticed is that over time, more suppliers of building energy management solutions include some form of Demand Response as part of their solution. This enables a temporary reduction in the power drawn by certain services in the building where this does not impact on productivity or well-being.

Our latest review of the global leaders in Building Energy Management showed that almost half now offer demand response, the highest figure that we have seen to date. This includes both the global leaders in Building Automation and Energy Management and suppliers specialising in energy management.

At the same time, energy storage is being taken more serious as a viable and cost-effective way of providing additional resilience and peak capacity, both for energy suppliers and in some cases for consumers. While the UK is still some way from having a thriving market in home energy storage systems comparable to that developing in Germany (where residential electricity is significantly more expensive), it seems quite likely that any significant grid outages will give a boost to the market for battery storage for both residential and non-residential use.

It is still quite hard to judge how probable a major power outage is in the UK this winter. There are already further processes for demand reduction which can be invoked if the situation gets tighter than it did on November 4th. However a coincidence of severe cold with a lack of wind, and unplanned outages at power stations is not inconceivable. And the major strategic initiatives, such as the construction of two new nuclear power plants, will take years to come online.

The UK has got used to ‘living dangerously, and so far has got away with it. But the sensible response to a lucky escape is to learn the lessons, and  not to assume that your luck will go on holding indefinitely.

The very least we can say is that all organisations should be looking at the potential implications of even a short interruption to power supplies, and how they can best mitigate these.

I shall be talking a bit more about BSRIA’s latest research into building energy management and related areas in a webinar on Tuesday 24th November, so I hope that you will be able to join me then

Betting on the general election? Think again

This post was written by Julia Evans, BSRIA Chief Executive

This post was written by Julia Evans, BSRIA Chief Executive

There are number of ways of predicting the outcome of the general election and an equal number of ways of being wildly incorrect. Bookmakers across the land are considering the 7th May to be a field day equal only to the Grand National in terms of punter cash finding its way through the betting shop door and not finding its way out again.

The one thing that seems sure is that the outcome is likely to be uncertain with both a three way coalition and a rerun of the election in the Autumn both being seen as possibilities.  So, where does that leave construction and building services?

Just as education and the health service are perennials in political manifestos so construction has some constant themes. Although construction rarely makes front page news there are a number of issues that seem likely to make the political headlines. Maybe for reasons of one-upmanship, as in who is promising to build the most houses? It’s the Liberal Democrats, since you ask; who are promising 300,000 new houses a year and an assurance that they’ll all be energy efficient. Or the startling alignment and collaboration between the three main political parties who are promising to work together on climate change, which in itself is surely not a bad thing?

But what of the perennials that effect construction?

Representation at senior levels seemed threatened at one point by questions being asked about the continuation of the role of Chief Construction Advisor, this is now resolved at least for the next two years. However other things are less easy to solve – the impending skills shortage, the delivery of low carbon retrofit and the lurking influence of increasing devolution will all play their part. As will continuing pressure on late payment practices, poor treatment of supply chain and the weakening of centrally funded research programmes.

The uncertainty caused by the impending election has been felt in the slackening of demand for construction since the turn of the year, the recent results of our quarterly consultants survey suggested that there has been a halt in new work as we wait for a new government. This has also been seen in a reduction in the immediate pre-election period of house building starts just at a time when we need to be addressing the national shortfall.

So back to my punt at the bookies, I think I will put my money back in my pocket and find something more predictable to spend it on, maybe something in preparation for the barbeque summer?

Is this the Real Answer for Cheap Green Energy?

Ever since the first serious concerns were raised about man-made climate change a generation ago the world has been caught on the horns of a dilemma. The choice has too often seemed to be between securing the kind of short-term economic growth which the developed world expects and the developing world desperately needs  on the one hand, and paying more now in order to secure the future of our world on the other.

It is small wonder that green energy solutions are still seen as something of a luxury accessory, perhaps affordable in times of prosperity, but pushed into the background at times of world recession, when achieving growth and combatting fuel poverty becomes an even bigger concern.

But could it be that a large part of the answer is beneath our feet, or that at least it might be: an answer that could have a huge impact on the UK as it already has had in similar countries. For once I am not  talking about fracking, but about something that has been around for a century, though the technology continues to evolve in exciting ways.

The heat network rests on the fundamentally simple idea of producing heat (or cooling) centrally, in the most efficient and environmentally friendly way, and then distributing this through highly insulated underground piping, to homes, offices, hospitals, factories and anywhere else that needs it. Often this simply taps into heat that would otherwise be pumped wastefully straight into the atmosphere.

Different measures could radically affect the growth of Heat Networks in the UK

Different measures could radically affect the growth of Heat Networks in the UK

 Such networks not only distribute heat but can store it, for hours or potentially  months, ironing out the wild and often unpredictable fluctuations in both and supply and demand and making it much more practicable to use ‘green’ power sources, such as wind or photovoltaic that are inherently unreliable, not to mention biofuels. Even where gas is still used there is scope for greater efficiencies, especially where the opportunity is taken to use generated combined heat and power (CHP)

 So why is it that this technology accounts for only about 1% of the UK’s current heating needs while in Denmark, with an only slightly colder climate, the figure is over 60%. In fact most European countries already make much greater use of this resource than the UK does, as do countries as diverse as China, Japan and the USA.

In fact the benefits of district energy are already recognised by many UK hospitals, universities and industrial plants and office complexes, frequently powered by CHP systems which offer added security of supply. So why has the residential sector been so slow up until now?

Part of the answer lies in how the UK population lives: predominantly in individual houses which are more expensive to connect, and in most cases owner occupied or privately rented, making it much harder to convert individual householders to heat networks. The relatively low rate of house building in recent decades hasn’t helped either. Gas prices that are low by international standards have also reduced incentives to innovate in this direction.

However the last few years have seen a sea-change, with far more new homes tapping into heat networks, especially new flats, spurred on partly by enhanced incentives from government and encouragement from local planners, but also by a growing Energy Services industry that is prepared to make substantial investments in order to make a long term return.

Here at BSRIA we have recognised this trend, and so decided that a fresh look at the UK district energy market was needed. The result is a report which examines the market, the main players and what has drawn them into the market. It also considers the main positive drivers along with the biggest barriers to future development, and what can be learned from experience outside of the UK.

Our research indicates that the UK District Energy market is already worth over £400 million annually (including capital investment), and that it is growing at the fastest rate in its history, so that we expect it to exceed £500 million by

This blog was written by BSRIA's Henry Lawson

This blog was written by BSRIA’s Henry Lawson

2015).

The overview takes in different possible initatives on the part of national, and local government, as well as the EU, which could speed up development or hinder it, and at the key changes in technology which are likely to make a difference in future.

If you want to know how big this market is likely to be in two or five years’ time and what the prospects are for the future, then this should be an indispensible read.

To find out more about the report or to purchase it contact our Worldwide Market Intelligence team on 01344 465610 or wmi@bsria.co.uk

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