Knowledge is power for businesses looking to save on energy costs
With significant peak energy cost increases predicted this winter, businesses can look to save money by being proactive about how and when energy is consumed.
Taking control of their energy use could help British businesses to withstand predicted sharp rises in electricity costs this winter, experts have said.
Speaking at a roundtable event organised by the Telegraph, Jason Smith, pricing and proposition manager at energy company E.ON, said that responding to changing daily pricing of energy would allow businesses to cut costs and deal with the growing gulf between the price of peak and off-peak energy – and that existing and emerging technology will be key to making this happen.
“Businesses have a responsibility to get more engaged with energy use than they are,” he said. “This ties into their bottom line.”
Mr Smith was speaking after warnings that UK energy costs could rise sharply this winter, and businesses will also have to pay extra-capacity charges in future winters to help secure the UK’s energy supply.
Brian Lonn, also from E.ON, said many businesses, such as retailers, control their energy budget centrally, so viewed their energy budget as a fixed cost. He said: “This is part of the problem. The two biggest things that will raise awareness of changes in the energy system are if there are power cuts and when businesses get their bills.”
For many commercial energy buyers, prices fluctuate half-hourly, and a lack of insight into pricing harms businesses. A recent survey by the Telegraph and YouGov found that, although one-fifth of businesses spend more than £250,000 on energy a year, 54pc of senior managers have “no idea’’ who is responsible for buying this energy.
“But there are things businesses can do about rising costs,” Mr Smith said. “Using demand-side management techniques to optimise their energy consumption, they can make savings.” Even without investing in new technology, simply being more aware of tariffs could help save huge amounts for heavy users of energy during the winter.
The cost of energy at peak times, such as early evenings, is increasing faster than that of energy used at other times of the day. Mr Smith added that businesses could take advantage of the gap between the tariffs by using on-site sources of power to fit demand more closely. They can also enrol in demand-side response schemes to earn new sources of revenue by selling their flexibility back to the system as reserve capacity.
Peaks for businesses can be compounded by the heavy loads demanded by heating, ventilation and air-conditioning systems, says Mr Smith. Investing in power storage or management for these energy-intensive systems can allow businesses to leverage energy- price differences without disrupting their efficacy. The group noted that Britain’s relationship with energy pricing is several years behind other countries such as France and Germany, where the use of different tariffs and other energy incentives had raised awareness.
“Modifying behaviour can be achieved,” said Brian Nolk, economist at the Association for Consultancy and Engineering (ACE). He pointed out that the French government had been more proactive than the UK’s in producing different tariffs for peak and off-peak times. “They have a much smarter and more robust load because of it.”
Nicholas Falk, chair of urban design specialist Urbed, said residential and commercial developments could be built with facilities such as combined heat and power plants. This would ensure that more power was generated locally rather than being lost while being transmitted – a huge source of inefficiency at present.
He added: “We have to get power generation operating at neighbourhood levels, including town centres, not just housing estates. Let’s show how we can take a holistic approach at an area level.”
The panel also discussed how storage technology, including batteries with larger capacities, could make a huge difference in how we use and generate commercial and private energy, how it could influence infrastructure design and energy tariffs, and how the market operates.
“It’s going to grow very rapidly, and could be a game-changer for the entire industry,” said Mr Lonn. “Storage at every level of the network will make a difference. Ultimately the storage has to be wherever it is most economic.”
Adam Fudakowski, the managing director of Switchee, said that it could take 10 years to pay back the investment in today’s batteries at today’s prices, which could be off-putting to many businesses. Mr Nolk said the economics may not be favourable to many businesses, but while the early adopters of this battery technology were likely to be at a residential level, this would eventually be a feature of business generation, too.
“Businesses are not powerless when it comes to their energy bills,” Mr Lonn said. “If they get engaged there is a lot they can do already, with low impact on their core operations.”
As generation and storage solutions become increasingly common and cost-effective measures, early adopters could soon reap the rewards of embracing a more direct approach to energy supply.
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