Energy bills now a defining challenge and opportunity

In recent months the focus on sky rocket energy prices for domestic consumers has overshadowed the plight of businesses and the public sector. High energy users - whether they make steel or run local swimming pools - are particularly vulnerable to energy costs but the impact is universal, raising commercial prices, folding businesses and threatening public services. Last week, on top of its domestic price control package, the government offered a six-month price cap for businesses, though for many it’s not clear what this means in practice, or what will happen after six months.

One industry spokesperson told the BBC "There's talk of continuing to support vulnerable sectors or small businesses beyond six months. An awful lot of them are vulnerable - in fact, all of them, if they're using significant amounts of electricity." Some, in a bid to avoid up to five-fold price increases have already signed fixed price energy contracts, and now await news from BEIS what this means for them. And it's not just commercial businesses: for example, The Guardian recently reported that the energy bill for The Lowry Arts Centre in Salford is now more than £1m, considerably more than its annual Arts Council grant of £869,000.

[edit] ROI looking good for active measures

All this has made operational energy costs a hot topic in finance and FM departments, and even boardrooms across the country. In addition to ‘passive’ energy solutions such as insulation, anyone who operates premises will also be looking to ‘active’ (engineering technology) solutions to help get energy, and notably electricity, bills under control. In response, manufacturers and contractors in our sector now offer an array of active electronic and electrical equipment (EEE) solutions.

These range from energy efficient lighting, sensors and controls to solar PV and other renewables, battery storage and ‘smart’ energy systems. Even with the government price cap, ongoing energy prices mean that the ROI for solutions such as new LED lighting may be a matter of months. Payback times for other active energy solutions are typically around a third of those being quoted in 2021.

[edit] Energy Pivot to cut costs and carbon…

As clients and customers look for viable ways to cut burgeoning energy bills with active products and systems, we shouldn’t forget that these measures also deliver significant operational carbon savings. And the scope for these will increase as EEE manufacturers continue to improve energy performance. For example, a major international lighting manufacturer’s new range of LEDs offer 60W output equivalent (840 lumen) for only 4W input. Reduced carbon emissions, even if they result from the primal need to reduce costs, all contribute to the UK’s 2050 NZC goals. They will also help the organizations that install them to meet the continued low carbon expectations of stakeholders.

The high cost of energy is now driving strong customer demand for energy solutions. All this means that the much vaunted ‘Green Pivot’ - itself already a considerable engineering services opportunity - has become an integral part of a much wider business opportunity for our sector – the ‘Energy Pivot.’

While Business 'pivots' may take some time to achieve, notably if there are supply chain issues, the opportunity is there. UK society and the wider economy now face a huge energy challenge, but our sector will be well placed to help many customers bring down seriously inflated costs. And whenever they do, much-needed carbon reductions will follow.

This article originally appeared as 'Energy bills now a defining challenge and opportunity' on the ECA news and blog site dated September 13 and written by Paul Reeve Director of CSR.

--ECA

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