NEWS UPDATE ENERGY BAROMETER REPORT
UK businesses paying more for their energy this quarter
Six cities to pilot heat network zones
The government has announced that six towns and cities have been selected to develop the country’s first heat network zones. The ground-breaking schemes in Leeds, Plymouth, Bristol, Stockport, Sheffield, and two in London will receive a share of £5.8 million of funding to develop the zones, with construction expected to start from 2026. Developing zones for heat networks in urban areas is thought to be the cheapest and most efficient way of delivering the technology, which recycles excess heat – generated for example by data centres or from factories – to enable the heating of several buildings at once. The heat network zones will use data to identify the best spots and will require suitable buildings, such as hotels and large offices, to connect when it is cost- effective for them to do so. Minister for Energy Consumers
Miatta Fahnbulleh says: ”Heat network zones will play an important part in our mission to deliver clean power for the country, helping us take back control of our energy security. As well as energy independence, they will support millions of businesses and building owners for years to come, with low-cost, low-carbon heating – driving down energy bills.” The six selected towns and cities
are part of the government’s plan to accelerate the delivery of heat networks across England in areas where zones are likely to be designated in the future. The learnings from these pilots will inform the work to reduce bills, enhance energy security, and achieve net zero by 2050. CEO of the Association for
Decentralised Energy Caroline Bragg comments: “We are delighted to see government maintaining its support for the heat network sector. Heat network zones are crucial for a just transition for our communities – putting the UK on the lowest cost pathway to decarbonising our heat, attracting more than £3 of private investment for every £1 of public funding given and creating tens of thousands of local jobs. As we begin to deliver zoning at scale, it is crucial that the government and industry continue to work together to ensure heat networks can truly unleash their potential.”
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Latest data from energy software provider POWWR reveals that the average UK business is spending £5,446 annually on electricity, a 5.5% increase from the previous average of £5,160. There is regional diversity, however, with businesses in North Wales paying 36% more for their energy than those in London (£6,293 versus £4,626). The fourth Quarterly Energy
Barometer Report from POWWR also highlights the differences businesses are paying for their energy when they renew as opposed to if they switch supplier. It found that businesses would typically save 6% by switching energy suppliers.
The report is based on almost 400,000 data points, and covers a variety of businesses, from boutique start-ups to large industrial and commercial organisations. As such, it provides deep insight into how much energy UK businesses are consuming,
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and what they are paying for it. Despite increased environmental
awareness, the report found that energy use has actually increased this quarter by 4.1%. “This is surprising,” comments
Matt Tormollen, CEO at POWWR. “We usually expect to see businesses decrease their energy usage during the summer months due to a mixture of holidays and better weather.” The average UK business now
consumes almost 24 MWh of energy a year. Businesses in Southern England are using the most energy (26,562 kWh), and London the least (20,808 kWh). The average contract length for UK businesses remains stable at 25 months, with only minor variances throughout the regions. Yet, the report finds that businesses are locking in future contracts up to two years ahead of start date. This is particularly true of smaller companies.
Insulation key to reducing the impact of higher prices
Energy bills under Ofgem’s new price cap have risen by 10% to £1,717 for the typical dual fuel bill household. New analysis from the Energy and Climate Intelligence Unit (ECIU) finds that even with households being estimated to cut their gas and electricity demand in response, by 15% and 10% respectively, bills this winter are still expected to be 55% higher than before the gas crisis. This means that a typical home at the government’s target Energy Performance Certificate (EPC) band C would pay £900 for gas and electricity over the winter compared to £580. However, households with poorer energy efficiency, for example those
that are not properly insulated, will pay even more. The least efficient homes, rated EPC band F, will pay an average £1,290 over the course of the winter, around £440 more than pre- crisis, and £385 more than one rated EPC band C. Even with households cutting
energy use this winter, homes in the UK rated EPC band D or worse will collectively pay up to £3.7bn more this winter in gas and electricity bills, compared to if they were all rated EPC C. Of these extra energy costs, £2.4bn would be spent on gas and £1.3bn on electricity.
Commenting on the analysis, Jess Ralston, Energy Analyst at the ECIU,
says: “Millions of households are facing higher bills this winter in cold homes that simply leak heat. Investment in improving energy efficiency through government schemes has dropped over the past decade and fallen even further in the first six months of this year. At a time of energy bill crisis, this makes very little sense. “Insulating a home brings down bills
once and for all, meaning people won’t simply turn off the heating to get by, which jeopardises their health. This is why government plans for minimum standards for privately rented homes are so important given they are the coldest and dampest properties.”
Further delay to revised EPC proposals
The property industry has been failed again by government officials. Despite endless commitments to do so, 2024 will end without any decision taken as to precisely when the long-promised programme to ensure improving energy standards in leased or rented out commercial buildings will start. Currently, no buildings with an energy
performance certificate (EPC) of E or F rating is legally permitted to be rented out. That has been the position since 2016. Five years ago, the government proposal
was to increase the minimum EPC towards a B rating, with a timetable schedule for change beginning in 2025. In a formal statement issued post-
Budget 2024, DESNZ acknowledged that: “during 2019/2020, and again in 2021, the previous government consulted on
strengthening the non-domestic private rented sector minimum energy efficiency standard and improving enforcement of existing regulations.” Seeking to explain their apparent
torpor in progressing implementation, the statement adds: “We have been working to review the policy design, including the timelines, to ensure that it remains fair and proportionate for landlords and tenants within the current economic climate. “
The only reason the timelines require
any review has been due to the complete failure by DESNZ to progress this dossier along the timetable they had set. In spring 2023, the government told
Parliament that they would at minimum publish all the consultation responses they had received before the end of
that year. Again, that commitment was not kept. Over 18 months later, officials now
are pleading: “We are committed to publishing a full response to both consultations as soon as possible. We are aiming to do so early next year, at which point we will be able to confirm the full policy design and compliance dates.”
EIBI | NOVEMBER / DECEMBER 2024
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