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ENERGY MANAGEMENT
are likely to have opted for fixed contracts for budget certainty, but with the help of the right partner, and innovative purchasing framework solutions, flexible contracts and the benefits of increased purchasing power aren’t just for bigger businesses.
A proactive energy partner will be able to group businesses with a similar level of energy demand and risk approach into a single purchasing framework, allowing them to negotiate contract terms with suppliers as if they were one single larger consumer. An expert will be able to help with all of this and advise which is the best solution for an individual organisation for today and for the longer-term.
You should also regularly - at least annually - revisit your energy contract terms to check they meet your current usage profile, business plans, working patterns and approach to energy efficiency. You don’t have to wait until it’s about to expire.
NAVIGATING THE ENERGY MARKET
Michael Dugdale, managing director at Trident Utilities, explains ways of taking control of energy during these challenging times
oday's energy market is volatile to say the least. Small and medium sized businesses - particularly those in energy intensive sectors such as manufacturing - have seen their gas bills rise by anything from 250% to 500% in the last year and it's getting more challenging for organisations to know how to best procure energy. Although the Government recently announced support for businesses with its Energy Bill Relief Scheme - which will help limit the impact of rising wholesale energy prices this winter - there are still ways organisations can navigate today's market and mitigate the pressures they face through managing risk, saving money and reducing carbon. While it’s impossible to predict every eventuality, energy market signals suggest that wholesale price volatility could be around for a further 12-24 months, which is why the Government’s recent intervention should go some way to easing the pressure. However, through being proactive, businesses can manage their risk and make a positive difference to their energy costs.
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Making the right energy choices It’s vital all businesses make sure they’re on the right energy contract. Unlike consumers, businesses aren’t protected by Ofgem’s energy price cap, so if your contract is coming
56 OCTOBER 2022 | PROCESS & CONTROL
to an end, it’s time to take action so you don’t roll over onto an expensive standard variable rate tariff. While the government has stepped in and provided some support this winter, it is unlikely the support will continue post April 2023 for the majority of businesses. When choosing an energy contract try and balance short- term needs with long-term benefits. The most effective approach is to look at your likely consumption profile over a three year period and break it down by the various elements that make up your
bill. For example, can you reduce non-commodity
charges?
Don’t overlook non-commodity costs
In fact, non-commodity costs are one area that is often overlooked. These costs are all charges aside from wholesale energy costs, such as Transmission Use of System (TUoS) charges, Distribution Use of System (DUoS) charges and Capacity Market (CM) charges. There is the potential to make thousands of pounds of savings every year through negotiating fixed or pass through terms and taking advantage of energy policy incentives and subsidies available to your business. Finally, when it comes to energy contracts, have you considered whether you are better off on a fixed or flexible contract? Many SMEs
Embracing the benefits of net zero While it may feel like there are bigger energy related topics to tackle, decarbonisation makes commercial sense now and is one way businesses can help manage overall energy costs. If businesses can optimise their energy costs, not only is this going to put them in the best possible position today, when we do see energy prices settle, it will help their business thrive.
Many organisations have embraced basic energy efficiency measures but there’s almost always more that can be done to cut consumption. A good place to start is with an energy audit, so you have a clear picture of where you’re using energy and then how you can reduce it. Organisations can then look at whether they can lower their energy use from the grid further and increase energy resilience with on-site generation. This includes measures such as solar PV, air source heat pumps, LED lighting and combined heat & power.
While energy market volatility is set to continue, what I can say with certainty, is that it is possible to make a difference to how your business is impacted through embracing measures to take control of energy. To reap the most benefits in terms of reducing energy risk, businesses should take a more holistic approach to energy management that aligns to broader business objectives. Make sure your organisation’s energy strategy is a board level concern and that everyone is engaged. Then measures such as getting the right energy contract, reducing consumption and installing on-site generation will have the maximum impact when it comes to reducing energy costs and helping weather the current energy market storm. The future is a bright, more energy efficient one.
Trident Utilities
www.tridentutilities.co.uk
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