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Cut your energy bills when prices are rising

Peter Franklin, Director of energy consultancy Enstra Consulting tackles the cost of energy.

How to cut your energy bills when prices are rising

Gas and electricity prices are rising again, and with the enormous investments needed in nuclear generation, renewable generation, building back up generation for when the wind does not blow, subsidising renewable heat technologies, expanding electricity networks to cope with the electrification of heat and transport prices, they will continue to rise in the future.

Business Juice’s energy barometer survey showed that if business energy prices were to rise by 15% every year, 90% of businesses say it would have an impact on them; 30% say it would be catastrophic or very serious.

The traditional approach to the problem is insufficient. Shopping around for the best value deal may of course help – but if all suppliers are raising their prices, as their infrastructure costs rise, businesses will suffer an inevitable increase in price as these costs are passed on to them.

The answer is to look at the problem from an alternative perspective. Businesses do not need to buy gas and electricity or other fuels. What they need is a means of keeping the building warm, of providing employees with light to work effectively, and having business machinery e.g. the PC, that works.

The Barometer indicates that businesses are starting to do this: 57% of businesses have introduced or strengthened policies to save energy. But that is not enough.

What is needed is for businesses to think: ‘how can I reduce the cost of keeping the building warm? How can I provide light and power at lower cost?’ Reframing the problem in this way opens up exploration of new technological possibilities and opens up new ways of financing the solutions.

Investing in better insulation and building controls could achieve keeping buildings warm at lower cost.

To provide the light needed at lower cost may well be achievable by switching to LED lighting and automated lighting controls. More efficient equipment may also reduce the cost of running the PCs etc.

However all these technologies require investment and traditionally this has run into three barriers:

  1. The limited availability of cash for investment;
  2. An inability or unwillingness to take on new debt;
  3. The unwillingness of landlords to finance investments that tenants get the benefit from.

The solution is an energy service contract whereby a third party undertakes the investment and supplies the required warmth, light, and power.

With investments in say, lighting, able to generate 50-70% energy saving, there is enough in the kitty to pay for the technology, its installation, the finance, a profit for the energy service provider, and a lower cost to the business.

Businesses need to adopt this new paradigm to unlock their energy savings potential and get costs down as prices rise. In the US this is happening but not to any great extent, yet, in the UK.

An organisation like the Carbon Trust, teamed with Siemens to provide finance, would be a good first port of call if you are interested in making the shift to the energy services paradigm.


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