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”.
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.
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.
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.”
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.
Choosing a green energy tariff is a valuable step towards making your business more sustainable.
Renewable energy Purchase Power Agreements (PPAs) are becoming increasingly popular as the corporate world acknowledges the role it can play in helping the UK to meet its carbon-zero targets.
However, some of the green tariffs on the market – and there is plenty of choice – are greener than others in terms of how much they directly support investment in the UK renewables industry.
A third of domestic customers surveyed by Which, for example, believe that if an energy tariff is marked ‘green’ or ‘renewable’ then they expect to get 100% renewable electricity into their homes. That is not always the case.
Rest assured, all supplied contracts issued under Energy Management’s Green Energy Framework will be accompanied by a Renewable Energy Guarantee of Origin (REGO) certificate which lays out the source of the energy in black and white.
The REGO scheme provides transparency to consumers about the proportion of electricity that suppliers source from renewable generation. All EU Member States are required to have such a scheme.
The United States’ reliance on coal-fired power generation appears to be diminishing, despite President Trump’s best efforts to support the industry through favourable legislation.
On more days than not this year, utilities got more electricity from renewables – hydro, wind and solar – than from fossil fuel.
Last year, there were just 38 days when this was the case; however in 2020 already, the number is up to 122 days, including the whole of the month of April and all but three days in May.
While this is encouraging news in the global fight against harmful carbon dioxide emissions, the US is still lagging behind other nations in terms of cleaning up its act.
The UK, for example, went a record 67 days without any coal-fired power generation between April and June this year, when demand at the peak of the Covid-19 lockdown was admittedly low because of business closures.
Even so, that 67-day record represented the longest run without coal power since 1882.
In the US, government intervention does not seem capable of reversing the trend from coal to renewables, as natural gas is a cheaper alternative due to an increase in supply.
Hydraulic fracturing and horizontal drilling have enabled an 80 per cent increase in U.S. gas production since 2006, and about a 50 per cent decline in price. By contrast, coal prices have risen modestly over that period.
BP has announced a $6.7bn quarterly loss after global demand for oil slumped during the height of the Covid-19 pandemic.
Oil prices fell dramatically as a result of the economic slowdown and turned negative for the first time in consumer history in April.
In the short-term, BP said it expected demand for oil could be up to nine million barrels per day lower compared to last year.
Shareholder dividends have been halved with forecasts for a challenging future ahead, while 10,000 jobs are to be cut – with around a fifth of the redundancies expected to be in the UK.
In response, BP said it wanted to move away from being a traditional oil company and reinvent itself as an integrated energy company by focusing on renewables and bioenergy as well as hydrogen and carbon capture and storage technology.
A combination of carbon capture technology and continued reliance on renewable forms of energy generation could result in the UK’s electricity grid becoming carbon neutral by 2033, according to the latest Future Energy Scenarios report from National Grid.
With investment in renewable energy generation growing, National Grid expects at least 3GW of new wind power capacity and 1.4GW of solar generation every year from now until 2050 as a result of the upsurge in projects.
It is also anticipated that the Electrical Vehicle (EV) market, set for a boom year in 2020 until Covid-19 put the brakes on, will play a big role moving forward with the potential for as many as 30 million EVs effectively acting as smart-charging “batteries” to help balance the electricity grid. For this to be realised, there needs to be a serious upgrade in vehicle to grid networks
Meanwhile, homeowners will play their part by consuming up to a third less electricity after switching from gas boiler central heating systems to heat pumps fitted with thermal batteries.
Mark Herring, head of strategy at National Grid ESO, said: “Across all scenarios, we see growth in renewable energy generation, including significant expansion in installed offshore wind capacity. There is widespread uptake in domestic electric vehicles, and growth and investment in hydrogen and carbon capture technologies too.
“Although these are not firm predictions, we’ve talked to over 600 industry experts to build this insight and it’s clear while net-zero is achievable, there are significant changes ahead,” he added.
Green business energy is proving more popular than ever as businesses increasingly set out a procurement energy strategy aligned to sustainability as well as cost.
While not all businesses are able to generate their own energy – a sustainable way of putting less pressure on the national grid – green energy contracts are widely available.
But what exactly is a green energy contract?
Basically, the gas and electricity that powers your premises of work comes from a supplier who has sourced it through a renewable energy generator such as wind or solar farms, hydroelectric power stations or biomass plants.
The amount of energy from renewable sources differs from supplier to supplier; however, it is a legal requirement for them to publish details of their fuel mix.
The more businesses (and households) that adopt this policy, the more renewable energy is fed back into the grid, and the country’s dependence on fossil fuels reduces, helping to alleviate the onset of climate change as a result.
If you’d like some advice on the range of green energy contracts that are currently being offered on the market, please get in touch with one of our energy consultants on 01225-867722
A good energy procurement strategy optimally matches your business needs with the many choices that are available when it comes to buying energy.
Energy is often one of the biggest overheads for a business, so it is crucial to adopt the right approach in how you go about purchasing your gas and electricity.
Here are a few FAQs around the subject that may help in your decision-making process.
What is the best Energy Procurement Strategy for 2020?
The best strategy will be determined by the needs of your unique business.
Energy prices fell dramatically during the early stages of lockdown to reflect the lack of demand, but following the easing of restrictions and the resulting step up in business activity, they are now climbing out of what appears to be a market trough,
Even so, energy suppliers are being selective about who they deal with and are avoiding perceived high-risk industries, such as hospitality, catering and travel, that have all come under intense pressure since lockdown started back in mid-March.
Businesses within those sectors on a fixed energy deal in a market where prices are rising will feel they are in a relatively good position from an energy procurement perspective as they’ll be protected against the prospect of being hit by increased risk premiums.
However, these are unchartered times, and without a crystal ball, managing risk has never been more important. Hence, having the correct strategy in place and being able to respond quickly to opportunities as they arise is crucial.
What is the best Energy Procurement Strategy to manage risk?
Simply put, it’s the strategy that’s most suited to the business. But first, you need to understand the role of risk in your business.
Some businesses do not have the option of adopting higher risk for potentially higher financial returns as budget stability might be more important to them.
Your business may have long-term fixed customer sales contracts which do not allow for passing on increases in energy costs to your customers.
In order to protect profit margins, having fixed price energy contracts is preferential to having the opportunity to take advantage of falls in the energy markets. This is because the risks of energy price increases would ultimately be more damaging to the financial performance of the business.
For energy-intensive businesses, in order to compete on price, it’s important that you’re buying energy at the current market rate, so a flexible contract that tracks the market could be advantageous.
As a general comment, a fixed price contract which is renewed when the energy markets are low has historically added value, particularly as they often avoid increases in non-commodity costs.
What is the difference between a fixed and flexible energy procurement strategy?
Most people view flexible contracts as riskier than fixed ones but, in reality, they can be used as a hedging tool to smooth out the volatility of market movements.
A flex contract enables you to fix any amount of energy for any period of time. For example, you could fix energy prices for half your anticipated consumption for the duration of the contract, and let market prices dictate the cost of the other half once you have interpreted market dynamics through the use of helpful energy management analytical tools such as EM-Powered. The price you then pay is the average between the two actions.
Whether a fixed, midi-flex or full flexible strategy is adopted, it is important to have a dynamic approach. By this, we mean fixing contracts when market movements present opportunities and not when you come to the end of a fixed period contract in the blind hope that the markets will be favourable.
How can Energy Management guide you in your Energy Procurement Strategy?
We can assist you by establishing and implementing an energy procurement strategy that best serves the needs of your business.
Once the right products have been selected and delivered, the performance of energy suppliers will be audited to ensure optimum budget management moving forward.
Ongoing invoice validation and budget management are also key in managing your energy procurement strategy.