FEATURE CONSULTANCY SERVICES
TACKLING THE ELECTRICITY MARKET REFORM
Tim Hipperson, Head of Supplier Relationships and Regulation at Utilitywise, says companies must instill a new philosophy within their business and create a culture of energy saving
T
he Electricity Market Reform (EMR) – the UK Government’s initiative to attract
the investment to replace our ageing energy infrastructure and meet the projected future increases in electricity demand – is now enshrined in law with the passage of the Energy Bill to the Energy Act. While the EMR will try to meet future energy demand, energy bills for companies both large and small will continue to increase as the costs of the reforms find their way into a business’s energy bill. Businesses are not powerless when it comes to these changes and the opportunity is there for a company to seize the initiative. Firstly, businesses should look at their energy procurement strategy, turning energy into an asset. Depending on their usage there are different solutions for each customer; for those on a fixed tariff structure it is essential to find a transparent and clear billing rate. While it is always vital to choose the right utility unit rate in order to ensure that they understand what they are paying for. The EMR is introducing a swathe of initiatives which will add costs to many elements of the final bill. For those on a flexible contract, similar issues over transparency should be considered. However, the changes being introduced by the EMR should not stop businesses taking advantage of the moves in wholesale prices. As such, it will remain essential that they have the best market information in order to make informed trading decisions. In both cases, Utilitywise consultants have the ability to provide the help and advice needed to understand the myriad contract offerings and navigate the confusing maze of possibilities. The second element businesses need to
consider is the source of their energy. It is unavoidable that the EMR reforms will increase the scale of non-commodity charges and one way of reducing these charges is to reduce the volume of energy you buy from supplies. Indeed, in many ways the EMR is actively encouraging businesses to consider the energy market in this way. Initiatives such as the Contracts for Difference Feed-in Tariff (CfD FiT) will increase energy bills to support investment in large scale new
24 SUMMER 2014 | ENERGY MANAGEMENT
full insight into a business’ electricity, gas and water usage. Clear reports on energy consumption – and energy waste – can be shared across a company, automatically, and in as much detail as required. Optimising energy usage will cut bills in
generation, whilst other projects including the ongoing standard FiT and the incoming Capacity Market will encourage businesses to look at on-site generation. Not only will building your own generation lower your energy requirements and, potentially, provide an additional source of income, but further benefits can also be achieved by running the plant at times of peak demand, reducing Triad charges, and during the periods of high unit rates for DUoS charges, further reducing your non-commodity bill. Even before the EMR, there was always a
push for using energy wisely in order to reduce costs. It has always been important to understand where, when and how energy is being used. Now, the third thing that businesses need to consider with the EMR is how this information can be put to best use. Using a reporting platform, like Utility Insight by Utilitywise, allows a business to monitor and target energy consumption, identifying unusual patterns, trends or out-of-hours consumption. Utility Insight is a multi-utility, web- based reporting platform that gives users
Using a reporting platform, like Utility Insight by Utilitywise, allows a business to monitor and target energy consumption
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every instance, but under the EMR and the Capacity Market, there is the potential for businesses to sell any flexibility they have in energy usage to the system. Businesses will have the opportunity to auction off any ability to reduce demand to the market during peak times, helping to improve system security while also providing source of income. It is vital that energy use is properly monitored and assessed before this path is taken in order to ensure you know what you can offer the market and that you can fully deliver it. The final point to consider for EMR is to engage staff in energy savings. The creation of a Green Team within a business can maintain the savings identified. They can work within each area of the business formalising efficiency procedures and ensuring continual improvements in the reduction of consumption. EU energy directives will ensure organisations within the smaller non- domestic sectors will receive smart meters. This means smaller businesses with an electricity profile class of 03 and 04, or a gas consumption of less that 732MWh per year will receive the technology. However, with the costs of the smart meter programme effectively paid by businesses, they should make the most of them through effective use of analysis and reporting capabilities. A volatile market and energy efficiency
legislation is not going away, and there is no one-size-fits-all solution to reducing costs and consumption. However, changes in how energy is sourced, managed and controlled and a realisation that responsibility for energy needs to be taken at company level will leave businesses with a solid foundation in preparation for what’s to come.
Utilitywise
www.utilitywise.com 0870 626 0559
Enter 207 / ENERGYMANAGEMENT
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