Archive for May, 2014

Do you know how much you spend on electricity? Apparently 73% of business leaders don’t according to a new survey, with 60% unaware of how much their bill has increased over the last 5 years.

Although many directors don’t know their energy costs, over 70% did state that they thought the government should be doing more to encourage energy efficiency. Over half of those surveyed had also not considered solar-powered generation, which has the potential to cut business energy costs significantly.

The government’s growing emphasis on commercial roof-top mounted solar rather than large ground-based solar farms may help to change this however. Last week DECC announced that solar farms generating more than 5MW would not receive subsidies from April 2015, but that roof-top installations will be allocated a larger share of the feed-in-tariff.

According to the government, there are around 250,000 hectares of south-facing rooftop space in England and Wales, with just 5-10% currently used for solar generation compared to nearer 50% in Germany.

Despite the recent media and political focus on energy costs it’s clear that there is much to do to push energy costs and efficiency up the corporate agenda. But with the costs of solar installations falling and energy prices set to rise over the next 5 years, now is a great time to check how you could benefit from on-site generation.

The survey by Westinghouse Solar questioned 250 CEOs, Finance Directors and other senior leaders.

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New research from Carbon Statement has found that the hospitality sector will need to increase revenue by 12% over the next 5 years to offset rising energy prices and environmental taxes.

The research, involving pub and restaurant groups representing around 80% of managed outlets, was designed to assess the impact of energy efficiency on profitability. The report found that improving efficiency across the sector to the same level as the top performers would equate to an additional £100 million in profits.

The study is an effective way of translating the benefits of energy efficiency into cold hard cash. With energy prices set to rise in the long-term (alongside environmental taxes), those investing in energy reduction initiatives now will see real benefits in terms of margins and competitive advantage.

 

Around two-thirds of UK businesses use energy brokers or consultants to help manage their energy procurement. Some brokers focus solely on placing contracts, from which they earn a commission or fee, and provide little additional value or service. While this is a valid option, there are several areas where a good consultant can provide significant additional value beyond just recommending annual contracts

1. UK energy prices are volatile: the wholesale energy market can increase/decrease by 50%+ in a 12 month period, so waiting until your contract ends to renew leaves you exposed to significant price surprises. Independent expert advice on the best time to go to market, which is often not just before your current contract ends, can result in significant savings.

2. Contract offers are increasingly complex: the growing number of 3rd party costs (transmission, distribution, metering, Renewable Obligations etc) makes it difficult to compare offers from suppliers all presenting their prices differently. Interpreting these price models so you’re comparing like-for-like is vital, yet requires specialist knowledge.

3. Validate invoices: just as price offers are becoming more complex, so are charges and invoices. Reconciling and checking actual consumption data and pass through charges such as the Feed in Tariff (FiT) with invoice data identifies supplier errors and ensures you’re not overpaying, yet requires specialist systems and expertise available to some brokers.

4. Switch suppliers smoothly: although improved in recent years, switching suppliers can be a fraught process, resulting in punitive out of contract rates if it goes wrong. A good consultant will handle this process, saving time and potentially money.

5. Consumption reduction: by analysing meter data to understand consumption profiles, energy consultants can recommend savings opportunities, from low-cost behaviour change to payback assessments of energy-efficient technologies (eg LED lighting)

One final point: any broker saying their service is free is being at best economical with the truth. Always check how they make their money – most receive a commission from the supplier which is added to your unit rate, which means you’re paying an indirect fee.

If you’re not receiving at least some of the benefits listed above then do get in touch; Energy & Carbon Management clients receive these benefits as part of their procurement service, with no extra fees, generating savings and identifying opportunities to reduce energy costs.