February 22, 2022
Sophia Bhaumick
Senior Marketing Manager, Arloid Automation

The Market for AI and the Barriers to Adoption: In Conversation with Craig Melson

“Big companies get the need to reach Net Zero, but they haven’t really bought into the tech agenda… They’ve got a fear of change because their whole business model is about reliability – and anything that tinkers with the system can jeopardise that.”

AI and technology have the potential to be the driving force behind decarbonisation and energy efficiency, making Net Zero possible for UK businesses. But perceived barriers remain, restricting the widespread adoption of climate technology.

In this interview, Senior Marketing Manager Sophia Bhaumick talks to Craig Melson, Associate Director for Climate, Environment and Sustainability at TechUK, about the market for AI-powered energy solutions, and why companies are still resisting adoption of them.

Sophia Bhaumick:

Tell us about TechUK and what you do.

Craig Melson:

TechUK is a trade association for the tech sector with 850 members, and I lead on all things sustainability and energy related. Under me I have a dedicated smart infrastructure programme which looks at the digitisation of energy and how the tech sector can become more sustainable, as well as how we can help decarbonise other sectors too.

We strive to represent the views of our members and also promote what they’re doing in a positive way, championing tech as a solver of problems. My CEO came up with a mantra for the tech sector, it’s ‘move fast and break things’ or ‘move fast and fix things’. Through tech, we can recreate the world – and make it better.

Sophia Bhaumick:

It would be good to hear your views on the new products and technologies that are coming up, like Arloid, where we use deep reinforcement learning to optimise energy efficiency. What are your views are on the benefits of AI for businesses and individuals?

Craig Melson:

Infrastructure and buildings account for a significant percentage of the world’s emissions, so building automation is going to be a huge area for companies to look at. In the UK there are various schemes like the Green Homes Standard which got dropped and the Net Environmental Gains principle for planning, so I think there are lots of companies moving to help the built environment understand its impact and what can be done to address it.

Lots of businesses are also starting to see rapidly increasing costs, so finding new processes that can boost energy efficiency will be key – and tech is a part of that. This kind of technology can, of course, play a vital role in delivering Net Zero more quickly, but there are also a host of other benefits – productivity gains, cost savings, that sort of thing.

Sophia Bhaumick:

What are your thoughts on the future of the UK market for AI and climate tech?

Craig Melson:

I see a lot of companies moving into climate tech and clean tech solutions fuelled in part by regulation. Companies are having to account for the climate for the first time, and many have taken on Net Zero targets and so they need to figure out how exactly they can do that.

I think this move is also fuelled by things like ESG investing which has meant not only is there more money available but also that these projects are easier to finance than those using traditional energy sources. So companies are redirecting their investments and choosing to put their money into things that can actually help them achieve sustainability targets and meet ESG criteria.

But yeah, those are the big drivers behind it, and Arloid is obviously benefitting from that and is growing accordingly.

Sophia Bhaumick:

Exactly. This is a new market, but it’s also been around for a long time. All over the world, a shift is taking place, and businesses in the built environment are finally starting to adopt these technologies.

Craig Melson:

It definitely is happening in the UK, and obviously the UK was the first to have a definitive Net Zero target and legislate for it which meant companies had to start doing things differently. And there’s just a lot more money going into it now which is helpful.

Sophia Bhaumick:

You’re right. In the UK especially, people are focusing on this field as a driver of change. There are grants and budgets out there specifically for the built environment to help us move in the right direction.

Craig Melson:

And AI is a really, really useful part of this. We support the message from the World Economic Forum that AI deployed properly even with the rebound effect could reduce global emissions by 15%. We’re also supporters of the International Centre for AI and Energy.

Sophia Bhaumick:

It’s amazing to see and great to get your input on where the market is moving. Could we delve into some of the barriers to adoption and what you think they might be?

Craig Melson:

A lot of big companies are investing, but at the same time a lot of them aren’t adopting these technologies. I was talking to a big building developer about connected homes or smart home tech and here the main barrier is the cost of implementation from the start. That really educated me because it’s just low down on their list of priorities – they don’t need or want to face it, so it’s a real challenge.

Sophia Bhaumick:

That’s interesting because here at Arloid we use a Gain Share Model and the way it works is you don’t have to pay anything upfront, you just have to pay a % of the overall savings we achieve for you each month. Although cost may seem like an issue, is there a need for more awareness across tech companies and end users?

Craig Melson:

Yeah, it’s a key barrier really and it’s definitely a key challenge for us. We need to get the companies who create this tech to understand the pressures that developers and other players in the built environment are facing for deploying AI and other technology and putting it into place to begin with.

Sophia Bhaumick:

So, we’ve talked about the challenge of costs, but what would you say are the other barriers preventing businesses in real estate using AI?

Craig Melson:

I think there are various other barriers. There are issues in the energy sector for companies in both generation and distribution networks.
Big companies get the need to reach Net Zero, but they haven’t really bought into the tech agenda. These big companies – legacy companies – have got strong, stable share prices. So they’ve got a fear of change because their whole business model is about reliability – and anything that tinkers with the system can jeopardise that. There’s a lot of cultural conservatism going on that slows everything down, and that’s something we need to change. Businesses won’t be incentivised to make the shift if it continues to seem more logical to keep going with the current system.

Sophia Bhaumick:

Yeah, that’s right. And as we all know energy prices in the UK and in Europe are soaring, and this technology could help address that. But big companies are still slow to move in the right direction.

Craig Melson:

Exactly, better efficiency means less energy needs to be imported and generated. And the green agenda doesn’t really appreciate this; it lobbies for renewables, but renewables aren’t actually that great at generating electricity. So, a key area to work on is energy efficiency and storage and addressing the energy we’re wasting using tech.

Deconstructing the Barriers

Our thanks to Craig Melson for sharing his insights on the future of AI and climate tech, and why some businesses are still resisting adoption. With many businesses in the UK and beyond committed to adapting their processes for Net Zero, we must start to recognise the potential of AI and other technologies to drive energy efficiency. Deconstructing the perceived barriers and conservatism behind rapid change is the next step on the road to a more sustainable world. AI will help us get there.

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