Archive for July, 2014

The National Grid warned recently that electricity prices could double over the next 20 years, with the wholesale cost increasing from less than £50 p/MWH today to over £100 by 2035. Gas prices could also increase from the current 70p per them to around 100p.

The impetus behind rising electricity prices is the continued closure of coal-fired power stations due to anti-pollution legislation and the higher cost of low-carbon generation (solar, wind, nuclear, biomass etc).

The National Grid highlighted the possible role of shale gas, which it says could meet over 40% of the country’s gas requirements by 2035. The report did not say whether this would reduce prices, however, which senior leaders in the fracking community have already said is unlikely.

While shale gas may not have a significant impact on prices, it would reduce the UK’s dependence on imports, which could reach 90% as North Sea output declines.

Businesses need to understand the implications on their cost-base of a possible doubling of energy prices over the next couple of decades and start putting in energy reduction plans now. Most organisations can mitigate at least part of this expected cost increase through reducing demand and investment in efficient technologies that deliver a decent ROI.

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New research from the British Council for Offices has found that energy use in offices is significantly less than previously thought.

Based on each person taking up 10 square metres consumption is 40% lower than anticipated by BCO guidelines. If occupancy densities are reduced to 8 metres square per person, consumption is around 24% less than recommended.

Changing working styles and new technology have contributed to the lower power usage, with a combination of multiple smart devices and workers spending less time at their desks resulting in the reduction in demand, a trend which is set to continue.

What does this mean?

For building owners/operators these findings indicate that heating, ventilation and air conditioning loads can be reduced slightly, while cutting costs and helping to meet energy savings targets.

Before making changes to HVAC and other systems it’s important to understand the consumption patterns of individual office buildings however, both to identify opportunities to make savings, but also to ensure that these measures don’t conflict with the requirements of the building’s occupiers.

Analysing your meter data is key to this, ideally sub-metered by floor and major systems (eg HVAC), to understand when and where power is being consumed, and therefore where savings can be made.

The Royal Assent of the Water Bill will allow English businesses a choice of water supplier for the first time from April 2017. The non-domestic market was opened up in Scotland in 2008.

The end of regional monopolies means the water industry is finally following in the footsteps of the deregulated energy market, giving commercial water users the opportunity to change supplier in the search for lower prices and improved customer service.

Business benefits

Water deregulation should encourage businesses to take more interest and control in their water consumption and costs, making it easier to identify and implement water efficiency measures.

One immediate benefit for multi-site businesses will be the opportunity to appoint a single water supplier, making water administration, billing and monitoring far easier.

Suppliers under pressure

In the meantime, suppliers have three years to convince their currently captive customers that they should stick with them post-2017, so we should, in theory, see greater emphasis on customer service and added value such as metering, efficiency and tailored services.

 

According to Ofgem the potential for power blackouts over next winter has reduced: the gap between generating capacity and demand is expected to be between 5-9%, compared to a previous prediction of 3-7%.

In the slightly longer-term however, the picture is not so reassuring for winter 2015/16 with the supply-demand gap possibly as low as 2%.

While this doesn’t seem to leave much room for higher than expected demand due to, for instance, a particular long, cold winter, heavy industrial users would be asked to switch off equipment to ensure that domestic and other customers didn’t experience power-outs.

Ofgem maintains that this new ability to pay large industrial users to cut energy consumption during times of peak demand, coupled with the tendering of contracts with generators to provide additional power if needed, will minimise the risk of blackouts.