Whether it is through grants or subsidies, mitigating the cost of energy bills is a priority for many amidst these difficult economic times.
While there are existing schemes available to help UK businesses – with more assistance expected to materialise with the new government – it is more important than ever for businesses to make their operations as efficient and cost-effective with the resources they have. Identifying areas where you can improve your energy efficiency will allow these improvements within your company’s structure to cut down costs while also helping you withstand any potential energy supply shortages that may arise during this crisis.
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Is there an energy price cap for UK businesses?
One of the first energy policy actions taken by Liz Truss as Britain’s new prime minister was to freeze the domestic energy price cap. She promised to freeze energy bills at an average of £2,500 a year for the next two years from 1 October under the “energy price guarantee”.
This is welcome news for consumers. Businesses will not benefit from this kind of energy price cap as no such scheme has previously existed in the commercial sector.
However, “equivalent support” was announced on 21 September 20222 for businesses struggling to keep up with energy prices. The Energy Bill Relief Scheme will offer discounts for all firms for six months from 1 October.
What’s in the Energy Bill Relief Scheme?
The Energy Bill Relief Scheme caps wholesale cost only at £211 per MWh for electricity and £75 per MWh for gas, and removes green levies. Further clarification on which levies are removed is pending. The measures will apply to energy usage from 1 October 2022 to 31 March 2023; they apply to energy contracts made on or after 1 April 2022.
Details on the Energy Bill Relief Scheme, courtesy of Northern Gas and Power, are as follows:
- The scheme will apply to fixed contracts agreed on or after April 1 this year, as well as to deemed, variable and flexible tariffs and contracts.
- The savings will be first seen in October bills, which are typically received in November.
- The cap will be automatically applied to the bills and firms do not need to contact their suppliers.
- Following the initial six-month period, “vulnerable” industries – such as hospitality and retail – will continue to receive targeted support.
- The government is currently determining exactly which businesses will be deemed eligible for the longer-term help.
This is welcoming news for businesses, yet without concrete policies to cling to now, businesses can seek assistance through a few existing energy cost reduction schemes. Businesses should look to employ energy management systems within their businesses to cut costs immediately.
Are there any energy efficiency grants and schemes for UK businesses?
There are several schemes available to businesses, subject to qualification. Many of these can be found on Ofgem’s business energy efficiency grants and schemes guide.
Two of the more well-known schemes are EIIs and CCAs.
EII, or the Energy Intensive Industries Compensations Scheme, remunerates certain businesses that use high levels of energy. It recently received a three-year extension and also received a doubled budget than its first iteration.
Businesses who qualify (read more below on who qualifies for the scheme) can claim up to 85 percent exemption of their Contract for Differences (CfD), Renewables Obligation (RO), and Feed-in Tariff (FiT) costs.
By the name, Climate Change Agreements (CCAs) seem unrelated to business energy cost reductions. There are, however, mechanisms within the agreement that would allow businesses to earn reductions.
Businesses can enter into an agreement to reduce their energy consumption in exchange for a reduction on their Climate Change Levy (CCL). For example, a business could commit to a 1 percent energy consumption reduction year on year for the next four years. In exchange, the business would get a reduction on their CCL (up to 99 percent relief in some cases).
For businesses to qualify for EII or benefit from CCA, they need to report their actual energy consumption. A criteria for businesses to qualify for EII is the must “show how much electricity is used towards qualifying activity for a period of three months.” In the case of CCAs, a business would need to prove they are reducing their energy consumption year on year as pledged (as in the above example of 1 percent reduction YoY).
What can help businesses in their efforts to reduce energy consumption – and thus receive assistance on energy costs – is to employ an energy management system on their sites.
What is an energy management system?
An energy management system (EMS) provides businesses with the tools to monitor and control their energy use. The technological solution gives them easy access to their energy consumption data through graphs and reports.
ClearVUE.Zero energy management system allows businesses to harness the power held within business’ energy consumption data and accelerate towards improved energy efficiency, greater cost reductions, and even reduced carbon footprint. The platform is currently employed by many UK businesses to help them improve their energy efficiency strategies. The development of new features such as Alerts, gas consumption monitoring, carbon reporting, and more on the way means that our business users will have the tools they need to stay economically competitive and viable despite current market challenges.
ClearVUE.Zero’s circuit monitoring system provides instant insight into when and where energy is being wasted, giving businesses access to their organisation’s data from anywhere in the world. They can aggregate the data for granular, device-level intelligence or break down individual consumption by asset groupings so that they know precisely how much they are using and where any energy waste is occurring.
Book your free demonstration today and discover how ClearVUE.Zero can help you take control of energy consumption and costs.
(*This blog post was updated on 22 September 2022.)
