Businesses could 'take back control' of energy prices post-Brexit

Nobody yet knows the full impact of the UK leaving the EU but one positive step businesses can take is to seize greater control over energy costs. Jeff Whittingham, managing director at DONG Energy Sales, explores the options for commercial energy users.

Energy reduction initiatives help keep overall costs to a minimum, but during uncertain economic times, a structured approach to energy exposure is paramount to control commodity costs.

Uncertainty typically spells greater market volatility and we have certainly seen the energy wholesale markets react following the Brexit announcement, after a more recent period of relative calm. We can’t know how this will play out in the future, but by establishing – and sticking to – a risk management strategy that’s right for your company’s needs means that your business always purchases energy at a market reflective price, better enabling you to manage your risk.

Non-commodity costs have received a lot of attention in recent years because they now make up so much more of the energy bill than they used to – on average 50 per cent. This position is not likely to change as the elements making up non-commodity costs are typically driven by UK energy policy and infrastructure requirements and are not dependent on EU membership. In fact, in many instances the UK has chosen to go further than minimum EU requirements in terms of carbon saving targets, so we should expect existing levies to remain.

It’s obvious, but the single best way to manage energy costs is to reduce consumption. Most organisations will have already implemented a lot of the ‘easy’ options, such as fitting LED lighting or lower usage equipment, as well as influencing behavioural changes to ensure staff are better aware of their impact on consumption. ESOS recommendations became available to all at the beginning of this year, so all businesses now have a view as to where savings can be achieved and the likely costs of implementing those initiatives.

Visibility aside, it can still be difficult to obtain the necessary budget to pay for more expensive energy-saving initiatives, or for those with a longer payback period.

There are systems on the market that enable businesses to model the impact over a longer period to help build a more secure business case and it’s well worth using one that is capable of producing scenarios that quantify both the financial and the carbon savings achievable. There are several advantages to an ability to be more agile and responsive in your electricity consumption patterns.

First, the ability to either shift consumption or switch to alternative sources, such as on-site generation, during peak periods can make a significant difference to the network charges that you pay.

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