How businesses can cut their energy bills when prices are rising

Gas and Electricity prices are on the up again

Gas and Electricity prices are rising again, and with the enormous investments needed in nuclear generation, renewable generation and building back up generation for when the wind does not blow, subsidising renewable heat technologies, and expanding electricity networks to cope with the electrification of heat and transport prices are set to continue to rise in the future.

The energy forecaster research barometer showed that :

  • If business energy prices were to rise by 15% every year, 90% of businesses say it would have an impact on them: 30% say it would be catastrophic or very serious

What can businesses do to save money when energy costs are rising? pyramid thinking

The traditional approach to the problem is insufficient

Shopping around for the best value deal may of course help – but if all suppliers are raising their prices, as their infrastructure costs rise,  businesses will suffer an inevitable increase in price as these costs are passed on to them.

The answer is to look at the problem from an alternative perspective.

Businesses do not need to buy gas and electricity or other fuels. What they need is a means of keeping the building warm, of providing employees with light to work effectively, and having business machinery e.g. the PC, that works.

The barometer indicates that businesses are starting to do this:

  • 57% of businesses have introduced or strengthened policies to save energy

But that is not enough.

The energy service contract paradigm

What is needed is to think how can I reduce the cost of keeping the building warm? How can I provide light and power at lower cost?

This is because reframing the problem in this way:

  • Opens up exploration of new technological possibilities
  • Opens up new ways of financing the solutions

New technological possibilities: To keep the building warm at lower cost could be achieved by investing in better insulation and building controls. To provide the light needed at lower cost may well be achievable by switching to LED lighting and automated lighting controls. More efficient equipment may also reduce the cost of running the PCs etc

New ways of financing: The technologies above require investment. Traditionally this has run into three barriers.

  1. The limited availability of cash for investment
  2. An inability or unwillingness to take on new debt
  3. The unwillingness of landlords to finance investments that tenants get the benefit from

The solution is an energy service contract whereby a third party undertakes the investment and supplies the required warmth, light, and power.

With investments in say, lighting, able to generate 50-70% energy saving, there is enough in the kitty to pay for the technology, its installation, the finance, a profit for the energy service provider, and a lower cost to the business.

Businesses need to adopt this new paradigm to unlock their energy savings potential and get costs down as prices rise. In the US this is happening but not to any great extent, yet, in the UK.

An organisation like the Carbon Trust, teamed with Siemens to provide Finance, would be a good first port of call if you are interested in making the shift to the energy services paradigm. 

Published by: Enstra Consulting

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The Internet of Energy

Read the recent article by Ian Campbell of Enstra on the coming of age of the Internet of Energy based on his insights from being chair of the Smarter Homes and Buildings group at the EUA.  You can read the article by clicking here.

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