Adopting science-based targets and onsite renewables generation are two steps businesses can take in 2020 to cut energy costs, boost their reputations and help the UK prepare for a successful COP26, says npower’s Ben Spry
Despite being a major overhead, most businesses still don’t fully understand exactly how, when or where they use energy, or know how much it’s going to cost in five years’ time. The energy landscape is also changing rapidly: as energy managers know well, new regulations, supply security and sustainability demands present new challenges.
In the midst of all this change, the UK has become the first country in the world to declare a climate emergency and public opinion overwhelmingly supports this decision. In a recent poll by Opinium, 63% of the British public think we are in a climate emergency and 76% say they would vote differently to protect the planet and climate. As a result, parliament has set a target of net-zero carbon emissions by 2050. In order to meet this target, organisations will be expected to make a “fundamental change to their business models and operating practices”, according to the UK Energy Research Centre.
This year, as the UK hosts COP26, presents the ideal time to commit to a robust energy management strategy that can deliver multiple benefits: cost savings, carbon reductions and reputational gain.
Last year, our research found that 20% of UK energy managers reported that less than half of their energy efficiency plans had been implemented into business policy, suggesting they are struggling to get buy-in from senior executives to adopt a comprehensive energy management strategy.
With this in mind, here are the five key resolutions that energy managers should make, and campaign for internally, this year:
1. Navigate big policy changes
Business consumers that have invested in flexibility initiatives are likely to face higher energy bills as a result of Ofgem’s recently announced shift to a fixed network charge, now set for 2021. Without being able to reduce charges by powering down during peak-demand times – including the most expensive ‘Triad’ periods – energy managers should make the most of new opportunities emerging to earn revenue from flexibility. That is, by participating in the capacity market, National Grid’s balancing services and new local schemes by distribution operators, plus wholesale market optimisation.
2. Check you’re on track to meet net-zero
The business case for achieving net-zero emissions goes beyond mere green credentials. Non-commodity energy costs are set to rise by at least 20% over the next five years, mostly coming from green levies. Business energy managers should follow government guidance – ensuring their buildings have strong energy performance ratings, decarbonising transport and encouraging greener ways of working – to meet their businesses’ own sustainability goals and to help offset future charges and penalties.
What’s more, an increasing focus on reducing carbon emissions is key for business reputation and credibility. As a result, a growing number of businesses are now incorporating science-based targets (SBTs) into their energy management and operating strategies. SBTs provide a clear route to reducing greenhouse gas emissions at the levels scientists believe are necessary to keep global warming below pre-industrial levels of 2C. More than 8,400 of the world’s largest companies, representing over 50% of global market value, also now report on their environmental performance via the Carbon Disclosure Project (CDP) reporting platform. CDP data is scrutinised as part of the decision-making process by more than 525 investors with $96tn in assets, and 125 major purchasers with over $3.6tn in procurement spend. This provides a vital proof point for energy managers making the case for long-term energy plans.
3. Promote healthy carbon behaviour
One of the least obvious but most effective ways energy managers can reduce consumption is by promoting greener behaviour among staff. Energy managers can kick-start this by commissioning a carbon psychology assessment to ascertain key drivers for staff engagement and then identify bespoke measures to increase staff awareness and encourage ownership of energy savings. Taking this a step further, they can even deliver a companywide “switch-off” campaign.
4. Invest in onsite generation and battery storage
While onsite generation and battery storage require up-front financing, they allow businesses to reduce their reliance on the National Grid and increases their resilience and protection against the power cuts that we witnessed in the UK last August. At the same time, pave the way to start engaging in demand-side response (DSR). This gives energy managers greater control, allowing them to sell surplus energy back to the grid during periods of peak demand, simultaneously earning extra revenue while also helping to support the evermore renewably-focused grid of the future.
5. Drive efficiency with effective reporting and monitoring
Most energy managers are already well aware of the need to install smart or automatic meter reading (AMR), but it is vital that this is also underpinned with advanced reporting and monitoring processes. At a base level, this allows them to monitor and periodically adjust their energy use. However, energy managers should consider upgrading to a more sophisticated package that allows them to undertake more active management, as well as forecasting future consumption to drive greater efficiencies and cost reduction.
Too often energy mangers face a series of internal pressures, emphasising the importance of achieving cost-savings above all else, which can make it difficult to get internal stakeholders to take a long-term view and to see the advantages of investing in these initiatives. I hope these top tips and our recently launched Energy HQ ready-made presentation template provide energy managers with the insight and statistics they need to make the business case for adopting a long-term energy management plan.
Ben Spry is head of flexibility services at npower Business Solutions, Energy HQ