Energy procurement: When is the price right?

The first half of June has highlighted just how challenging it can be to secure the best business energy procurement deal if you’re not armed with the right information.

Despite what the most bullish energy consultant might say, no-one can predict the future, especially not when it comes to business energy prices.

Too many factors outside the control of suppliers and brokers come into play for that to be the case, whether they are geopolitical or meterological.

However, beyond doubt, the first half of June has been a period when prices have continued to be on the up, both in terms of gas and electricity.

Despite the warm weather the UK has experienced for the majority of June, gas prices continued on an upwards trajectory. Contracts have largely been dictated by an overall strengthening across global energy markets, with oil, in particular, displaying an impressive recovery.

Storage issues

However, other fundamentals have contributed to the bullish sentiment. A strong demand for LNG supply in Asia, combined with the continent’s lucrative pricing, has reduced deliveries into the UK and Europe and impacted storage levels that are replenishing slower than previous years due to a lack of surplus supply.

Scheduled maintenance and unplanned outages have also played their part in regard to price increases this month, limiting imports into the UK. As a result, the system has seen very few periods of oversupply despite low demand for heating.

Carbon conundrum

Meanwhile, wind generation has underperformed once again this month, adding to some of the gains we have seen in recent weeks. A lack of consistent wind generation has meant that reliance on gas-fired power was unseasonably high.

The hot weather we have enjoyed this month has also increased demand for cooling across the country, creating an additional challenge for a stretched energy mix.

Rising carbon prices have played a role behind increases on the power curve too, as this makes fossil fuels such as gas, oil and coal more expensive. An unwanted variable at a time when low carbon generation sources are in limited supply.

Oiling the wheels

OPEC+ members agreed to a gradual increase in production at the start of the month which helped oil prices (both Brent Crude and WTI) to reach a two-year high.

The International Energy Agency also called for a further increase in production to help meet expected demand over the next 12 months. Some projections even expect oil demand in 2022 to be greater than 2019.

As such, the agency has called on OPEC+ to increase output by 1.4 million BPD by next year, with a number of leading analysts predicting oil to trade at $100 a barrel in 2022.

Climate Change Agreement – TP5: A call to action

If you don’t know where you are, how can you know how to get to where you want to be?

That is the question we put to many of our clients when discussing the Climate Change Agreement’s (CCA) Target Period 5 (TP5).

Progress analysis and monitoring of energy consumption data is crucial if companies, especially those within energy-intensive industries, want to meet TP5.

The final target period of the CCA has been extended by the UK government for two years to incentivise industry to reduce its energy consumption against production in the overall drive towards achieving net-zero.

But by doing that, they have also moved the previous base line, from which data is measured against, from 2008 to 2018, to reflect any energy efficiency measures or improved productivity that may have taken place across the intervening 10-year period.

The Department for Business, Energy and Industry Strategy (BEIS) has recommended a 6.67 per cent decrease against the 2018 figures.

Raising the bar

Effectively the bar has been raised and companies need to do more if they are to meet the target, whether that is reducing the amount of energy used for the number of units they produce or produce more units but without using any more energy.

Energy Management’s National Account Manager Ian Scattergood has urged companies to address the situation before it is too late.

“The majority of the businesses whose energy data we have analysed will miss TP5 if they don’t act now,” he said.

“It’s a blunt message but they wouldn’t have got to this point had they carefully monitored their energy performance against production output.”

Identifying issues

A thorough monitoring process is easy to implement and will pay off further down the line, he adds.

“The greater the granularity of the data, the easier it is to see if there are any anomalies. If you are only looking at a month’s worth of energy consumption, it is more difficult to pinpoint days when there are spikes in energy use. Daily monitoring allows businesses to identify problems more readily.

“How can you fix a problem if you don’t know it exists?”

Once anomalies in energy consumption have been flagged through the monitoring process, companies can then look at what energy efficiency measures need to be taken.

“This could simply be changing work practices or staff behaviour – measures that don’t necessarily need much investment from a financial point of view, just a cultural buy-in from everybody involved,” added Ian.

“Beyond that, companies might consider site surveys which delve deeper into all operational aspects relating to energy use. Recommendations for ways things can be improved will then be put forward.”


Report reveals record levels of carbon dioxide

The amount of carbon dioxide in the air is at its highest ever recorded level, according to US-based scientists.

The National Oceanic and Atmospheric Administration’s (NOAA) weather station in Hawaii recorded carbon dioxide at about 419 parts per million last month, more than at any time since measurements began in 1958.

Pieter Tans, a scientist with NOAA’s Global Monitoring Laboratory warned there would be catastrophic results if more action was not taken to combat carbon dioxide emissions – a key driver in climate change.

One way businesses can play their part is through green energy procurement and behavioural change in the workplace. A reduction in the use of energy sourced from fossil fuel is one of the key ways in tackling the problem.

“We are adding roughly 40 billion metric tons of CO2 pollution to the atmosphere per year,” Tans wrote in the report. “That is a mountain of carbon that we dig up out of the Earth, burn, and release into the atmosphere as CO2 – year after year.”

The amount of carbon in the air now is as much as it was about 4 million years ago, a time when sea level was 78 feet (24 metres) higher than it is today and the average temperature was 7 degrees Fahrenheit higher than it was before the Industrial Revolution, the report said.

Despite the pandemic lockdown resulting in a significant reduction in road use and energy consumption, scientists could not see a drop in the overall amount of carbon in the atmosphere. This was partly attributed to the prevalence of wildfires, which release carbon into the atmosphere.

The Zoom boom: How broadband providers can manage energy costs

Knowing your megawatts from your megabytes is crucial for booming broadband providers and Internet Service Providers (ISPs).

IT and the internet is one of the boom industries of the last 12 months due to the changing behaviours brought about by the global pandemic

With working from home and home schooling becoming ‘the new norm’ during lockdown it has highlighted the need for an improved broadband network that covers all of the UK not just certain postcodes.

This increased demand – UK internet use has more than doubled in 2020, according to Openreach – has seen tech companies roll out network expansion plans and upgrades, creating thousands more jobs in this sector.

With increased demand comes the need for additional power supplies and meter installation is only the start of the process.

Clarity in energy reporting

To be able to understand and therefore save on energy procurement costs, it goes without saying that a business needs to know how much energy it is consuming in the first place – and when and where.

It is advisable for companies with a high volume of meters, such as a broadband provider or an ISPs to consolidate the captured data from meter readings in one place, such as an energy management portal, where it can easily be monitored and digested.

EM-Powered allows users to have a clear view of all their meters in one place, making it ideal for clients with 50+ meters on their portfolio.

Energy consumption and spend can be tracked on a monthly basis across all sites and can be broken down into bespoke groups, dependant on the client’s preference of reporting.

Only pay for what you use

One of the many added benefits to an energy management portal, such as EM-Powered, is that it helps to mitigate against errors in energy billing.

Invoice validation is a critical aspect to energy cost control because our experience tells us that as many as one in five energy bills are incorrect, with an average overcharge amounting to three to five per cent of the bill’s overall value.

EM-Powered helps to flag up any anomalies that might come about through misread meter readings or the wrong tariff being applied to a meter.

To find out more about EM-Powered, please visit our dedicated web page or you can speak to our specialist consultant Billy Pryke on 01225 867722.

International Energy Agency unveils Net Zero Roadmap

The International Energy Agency’s (IEA) has announced the world’s first comprehensive study on how to transition to a net-zero energy system by 2050.

And the message to governments around the world is that they need to up their game to achieve that target and slow down the rate of global warming.

With a focus on renewably sourced energy, the study – Net Zero by 2050: a Roadmap for the Global Energy Sector – sets out a cost-effective and economically productive pathway to get to a clean energy economy.

It examines the roles of bioenergy, carbon capture, and behavioural changes in reaching net zero in helping the world gets to where it needs to be.

By 2050, the aim is to have almost 90 per cent of electricity generation from renewable sources, with wind and solar PV together accounting for almost 70 per cent. Most of the remainder comes from nuclear power.

The greatest challenge

“Our Roadmap shows the priority actions that are needed today to ensure the opportunity of net-zero emissions by 2050 – narrow but still achievable – is not lost,” said IEA executive director Fatih Birol.

“The scale and speed of the efforts demanded by this critical and formidable goal – our best chance of tackling climate change and limiting global warming to 1.5 °C – make this perhaps the greatest challenge humankind has ever faced.

“The IEA’s pathway to this brighter future brings a historic surge in clean energy investment that creates millions of new jobs and lifts global economic growth. Moving the world onto that pathway requires strong and credible policy actions from governments, underpinned by much greater international cooperation”.

The roadmap includes a call for an immediate end to all investment in new fossil fuel supplies and states that further investment is needed in the research and development of new technologies.

Progress in the areas of advanced batteries, electrolysers for hydrogen, and direct air capture and storage could be particularly impactful, it outlines.

“The transition must be fair and inclusive, leaving nobody behind. We have to ensure that developing economies receive the financing and technological know-how they need to build out their energy systems to meet the needs of their expanding populations and economies sustainably”, Birol added.

Energy rollercoaster as lockdown eases

covid-19

The global coronavirus pandemic has had a significant impact on how much and what type of energy we use globally.

During the height of lockdown in 2020, every day was like Sunday in terms of energy use.

So dramatic was the impact of factories, shops and offices being shut down at the height of the global coronavirus pandemic, energy use fell to levels typically seen on the traditional day of rest.

An easing of restrictions brought about a rise in demand in June and July, and energy prices followed suit as a result.

By August, the sustained recovery meant that demand for power in EU countries was similar to that seen in 2019 when terms like ‘social distancing’ had yet to find their way into our everyday language.

In October, the demand curve continued in an upwardly direction but this was negatively impacted once a second wave occurred and restrictions on movement and workplace practices were tightened up again.

The end of the year, however, was marked by a recovery of electricity demand, now above 2019 levels after weather adjustment.

And now that measures have eased even further, in the UK at least, there will inevitably be extra demand for electricity as restaurant and pub kitchens start to cater for indoor dining.

With overseas travel now back on the agenda, to certain parts of the world, transport hubs like airports will also draw on the grid much more heavily than before.

In addition to price volatility, lockdown had a significant impact on the power mix. Across all major regions, this shifted towards renewables due to low operating costs and priority access to the grid through regulations.

Electricity demand and mix went back to previous trends with previous lockdown relaxation, the International Energy Agency reports, and analysts will be keeping a keen eye to see if that is mirrored in 2021.

Shining a light on green energy – what is it and why is it popular?

Green energy tariffs are becoming increasingly popular amongst net-zero conscious businesses.

On a record-breaking Easter Monday, the UK power network was its greenest yet with over 80% of the electricity produced coming from renewable energy rather than from traditional pollutant fossil fuels.

It is worth noting, however, that not all sources used by the renewable energy industry are green. Burning wood waste sourced from sustainable forests and turning organic agricultural waste into energy, for example, maybe renewable but the process is not green, due to the CO2 produced.

Green energy comes from replenishable natural sources, often without the need for mining or drilling operations that can be damaging to eco-systems.

The main sources harness the power of nature such as wind energy, solar energy, geothermal energy and hydroelectric power, including tidal energy.

Local benefits

From a business energy procurement perspective, suppliers offer a range of green energy tariffs that can be part-sourced or fully sourced from green energy.

In addition to contributing to a more sustainable future, one of the benefits of switching to a green energy tariff is greater price stability.

With these sources often being produced locally, the green energy market is not as affected by the geopolitical issues and supply chain disruptions that lead to volatility. When the Suez canal was blocked for six days due to the cargo ship Ever Given running aground, it caused chaos.

Also as knowledge of this sector becomes more advanced, it is becoming cheaper to produce green energy, making it a good low-cost solution for parts of the world where affordability has been an issue.

As the world strives to reduce carbon emissions and the cost of production continues to fall, green energy looks set to become ever more popular and this is likely to be reflected in the range of tariffs available.

Green energy would appear to be the future, fossil fuels a thing of the past.

Spotlight on EV charging point schemes

For workplaces and public sector organisations, providing on-site charging points for clients, visitors and employees alike will become increasingly important moving forward as petrol and diesel-powered cars are phased out and replaced by EVs.

There are a number of different schemes open to those looking to install this facility as part of their energy and carbon management, including the government-backed Workplace Charging Scheme which enables businesses, local authorities and charities to claim up to 75% of the charge point installation cost, up to a maximum of £350 per charge point installed. The subsidy is available for a maximum of 20 charge points and installations must be done by an Office for Low Emission Vehicles (OLEV) accredited installer.

Firms based in the United Kingdom (excluding the Channel Islands and the Isle of Man) can claim and don’t necessarily need a plug-in vehicle on the company’s books, although in Scotland funding is available through a different scheme called the Energy Saving Trust,

A ballpark figure for a standard, double-header charging unit is around the £1,500 mark after the WCS Grant has been applied. But costs can escalate depending on the type of unit, its position and its charging speed. Ongoing operational business energy costs can be managed through Energy Management’s EM-Powered energy management portal.

Customer and visitor electric cars will have different charging connectivity needs, so it is important to install a charging point most likely to be compatible with the widest range of vehicles possible. An Energy Management EV installation project manager offers advice on this and all other aspects of the EV charging infrastructure process.

Businesses in the hotel, tourist and leisure industry can access funding from a charity called Zero Carbon World. Zero Carbon World gives eligible locations physical equipment worth £450 that comprises one wall mounted 32A Type 2 Charging Station – the European standard that can add approximately 30 miles of charge per hour – and one parking sign, among other added-on benefits.

Alternative models

In addition to the WCS, charging infrastructure providers operate fully-funded, loss leader and profit-making schemes.

The fully-funded model is attractive in that it comes with no operational cost but it may not always be the most appropriate solution for your needs.

With the loss leader model, EV charging is provided free by suppliers to grow market share by attracting and retaining customers, with costs offset by increased revenue gained through existing business activity.

A free top-up charge can be the deciding factor for a driver in choosing where to offer their custom and the costs of offering, for example, 7kW charging to attract these drivers can be relatively modest.

As such, your first consideration should be whether you can offer charging for free to maximise the number of drivers you attract to your location, grow brand loyalty and encourage on-site spending.

Meanwhile, with profit-making models, a higher fee is levied on drivers to use the charge points. This fee covers operational, hardware and installation costs and provides a profitable revenue stream on top.

If you would like more information on what we can offer in terms of EV charging infrastructure services, please visit our dedicated web page.

New green energy record set as a strong wind blows

Wind accounted for 15% of all electricity generated in April and this form of renewable energy has also enjoyed a very strong start to the month of May.

Buoyed by blustery conditions, the UK’s wind farms helped the UK to establish a new clean energy record on Monday, May 3rd.

More than 17.6 gigawatts (GW) – was generated by onshore and offshore wind turbines, eclipsing the amount of electricity generated by nuclear, biomass and gas combined.

That represented nearly half (48.5%) of the electricity grid in England, Scotland and Wales, according to data from operator National Grid ESO, and beat the previous record of 17.5GW set on 13 February.

“The fact that wind is generating nearly half the country’s electricity shows how central it has become in our modern energy system,” acknowledged Industry body Renewable UK’s deputy chief executive Melanie Onn.

Landmark day

Last month, April showers may have been conspicuous by their absence but windy and sunny conditions combined to make Easter Monday a landmark day for green energy.

Over 80% of our electricity was produced by either wind, solar, nuclear or hydro, making the grid the greenest it’s ever been.

The carbon intensity – the measure of CO2 emissions per unit of electricity consumed – dropped to an all-time low of 39 gCO2/kWh.

While the rollout of green energy projects are being held back by an antiquated electricity network according to some industry experts, nature is at least playing its part in the drive towards achieving a net-zero future.

Graphic source: nationalgridESO

Network reform needed to help UK achieve net-zero targets

The UK’s drive towards net-zero carbon emissions is being hampered by an out-of-date and inflexible network, renewable energy developers and industry figures have said.

They argue that the energy grid was designed for fossil fuel generation and fails to embrace the planned rollout of green power.

Small-scale renewable energy projects are faced with high and sometimes prohibitive costs of connecting to the grid in certain parts of the country, due to the withdrawal of certain government subsidies.

Speaking to The Independent, Philip Dunne of the Environmental Audit Committee called for a reform to planning legislation to enable local renewable green projects to get off the ground and help in the drive towards net-zero emissions.

“Grid connection costs and access charges can be too high for small groups and do not account for the wider decarbonisation benefits – including education and social support – that the projects bring to their communities compared to commercial renewable projects,” said Mr Dunne.

Out of touch

Commercial energy developers also believe that the current system is out of sync with the needs of the UK whose growth in renewable energy output lags behind a number of other European countries.

They want to make it cheaper to connect green power to the grid which would make green energy tariffs more competitive.

Many wind and solar developers are tied to contracts that allow network operators to turn their supply down when there is excess energy being generated.

Typically this occurs when it is sunny and windy – conditions that are favourable from both a power generation and financial perspective.

Also, investors in new energy supply are sometimes disincentivised by the fact they have to pay companies that operate the network for upgrading local infrastructure because the existing capacity is taken up by fossil fuel suppliers.

Campaigners want older agreements, which typically date back to the 1990s when gas and coal-fire generation held sway, to be renegotiated and for more flexible arrangements around connectivity which allow for extra supply to be added more cheaply and faster.

Flexible connections make more efficient use of the existing network, meaning developers do not have to pay as much for infrastructure upgrades.