News Archive - Monthly Archives: September 2020

Subscribe to our monthly Market Intelligence energy report

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Understanding the vast array of factors that influence the energy price markets, whether they be geopolitical, climate or otherwise, helps massively when it comes to implementing a successful energy procurement strategy.

At Energy Management, our expert consultants are constantly analysing the ebbs and flows of electricity, gas and oil prices to help keep clients one step ahead of the game when negotiating a contract with an energy supplier.

Each month, we put together our Market Intelligence report in an easy-to-read PDF format to highlight the trends in the energy markets.

You can sign up for free by clicking here >>

Here are some of September’s ‘highlights’:

  • Year ahead power prices have risen to values not seen since last November
  • EDF and Hitachi deliver bad news for the nuclear industry
  • North Sea Gas field maintenance will also impact on the short-term market
  • Brent Crude Oil prices have been undergoing a rollercoaster ride, with $5 taken off the price of a barrel at one point
  • A 70% year-on-year drop in demand for oil has been forecast for 2020

EU green plan revealed

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European Commission President Ursula von der Leyen has confirmed plans to target a 55% cut in greenhouse gas emissions by 2030 as part of a broader European Green Deal programme aimed at reaching “climate neutrality” by mid-century, according to a report on EurActiv.com

“For us, the 2030 target is ambitious, it’s achievable and it is beneficial for Europe,” von der Leyen said as she unveiled the EU’s new climate proposals before the European Parliament in her first State of the Union address since she became Commission President in 2019.

“We can do it!” she said, coining a famous phrase used by German Chancellor Angela Merkel during the height of the 2015 migration crisis.

“Our impact assessment clearly shows that our economy and industry can manage this,” she continued, whilst outlining the progress already made – a reduction in emissions by 25% since 1990 during a period of sustained economic growth.

Von der Leyen’s optimism is borne from technological advances and the fact that Europe now has the expertise and the financial firepower necessary to make it happen, with a €1.8 trillion EU budget and recovery fund that was agreed by EU leaders in July for the years 2021-2027.

“We are world leaders in green finance, and we are the largest issuer of green bonds worldwide,” von der Leyen pointed out, announcing that 30% of the EU’s €750 billion recovery fund will be raised through green bonds.

“We have it all. Now it’s our responsibility to implement it and to make it happen,” she added, telling Parliamentarians: “This is our mission”.

Source: Edie.net

 

Third-Party Charges update

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Covid-19 has not only had a dramatic effect on people’s lives but also the energy market.

With industry effectively shutting down for long periods, business energy use over the year has plummeted while domestic energy use has risen, due to more people working from home following the closure of offices and other work premises.

The landscape has also changed with respect to the increased reliance on renewable energy generation as opposed to fossil fuels. Even the US, where government policy has favoured traditional sources over a more innovative approach, has broken records in this field.

Whilst low electricity demand and unusually high renewable generation is clearly a good combination in the race to a carbon-zero future, it does potentially have implications on the Third Party Charges (TPCs) customers may have to pay as the country’s power distribution system (National Grid) attempts to find some equilibrium.

As TPCs can make up to 60 per cent of your energy bill, news of any increase in this area is clearly not welcome.

TPCs include so-called green levies such as the Renewables Obligation (RO) and Contracts for Difference (CfD), which were introduced by the government to incentivise companies to be more energy efficient.

Others are designed to help support the National Grid, which is where the Balancing Services Use of System (BSUoS), Distribution Use of System (DUoS) and Transmission Network Use of System (TNUoS) come into play.

If you would like to know more about TPCs and how they may affect your business over the coming years, please get in touch on 01225-867722.

All you need to know about the CCA entry changes

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After a thorough consultation process conducted by The Department for Business, Energy and Industrial Strategy (BEIS) involving 101 key stakeholders, the UK government has decided to extend the new entrant deadline for the Climate Change Agreement (CCA) scheme.

Companies eligible to apply for the scheme can now do so up until 30 November this year after an overwhelming majority of respondents responded in favour of pushing it back by two months from the end of September.

First established in 2001, the CCA incentivises energy and carbon savings through setting energy-efficiency targets whilst also helping to reduce energy costs in sectors with energy-intensive processes by providing a significant discount to Climate Change Levy (CCL)

The current targets provide the basis on which organisations can make improvements to the energy-efficiency of facilities included in agreements over an eight-year period, ensuring their contribution to UK-wide goals, in return for savings worth nearly £300m annually.

As it has been agreed to change the baseline year from 2008 to 2018, companies already in the scheme will need to recalculate their energy consumption data and bring it up to date. We can assist with that process whilst also checking the eligibility of companies who wish to join the scheme for the first time.

CCAs are not intended as a straightforward subsidy for energy-intensive industries and are designed to encourage businesses to unlock additional energy efficiency potential. Our energy auditing process helps to identify areas where those possible savings can be made.

Also, by analysing consumption against throughput units, we are able to accurately monitor a client’s progress towards targets, allowing for more accurate budget forecasting.

If you would like to speak with one of our team about CCAs, please give us a call on 01225-867722.

Business energy procurement is best left in the hands of the specialists

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Companies that do not necessarily have the in-house expertise or the time to manage their own energy demands often turn to external business energy consultants to take care of their needs.

Business energy procurement (the buying of the energy that powers your company’s premises) is not always straightforward and a trained eye is needed to avoid some common pitfalls.

Choosing the right business energy consultant is one of the key factors behind a successful energy procurement strategy.

Buying power at the right time and the right price is an art in itself considering the volatility of the market and the multitude of factors that influence price hikes and falls.

“As a Chartered Electrical Engineer I would like to make the important point that energy procurement is a technical specialist purchase,” said chairman and founder of Energy Management LLP, Gary Weston.

“Comparing apples with apples is difficult when some energy offers have pass-through clauses, and what seems like a fixed price quote is anything but.

“For example, volume penalties can distort the true costs which vary considerably between suppliers.”

Hidden errors

With one in five invoices found to contain errors, amounting to around three to five per cent of the overall cost of the bill, invoice validation is another important service offered by business energy consultants.

“Once you have the best offer in place, invoice validation and the suitability of fixed availability capacity charges require ongoing review,” he pointed out.

“And then there is the perceived black art of power factor correction, whereby the types of load connected can adversely affect the electricity supplies power factor, triggering additional costs which can be alleviated.”

Working with Energy Management can save companies valuable time and considerable amounts of money.

“Not only will you have peace of mind in the knowledge that you’re on the right contract, but that your energy costs are being managed professionally on a day-to-day basis,” Mr Weston added.