By Andrew Diplock, Managing Director, UES Energy
In a poll of 300 of the UK’s biggest energy users, half thought a government commitment to keep energy costs at or below the EU average would be the biggest incentive for companies to increase manufacturing output.
Terry Scuoler, Chief Executive of the manufacturers’ organisation EEF, which commissioned the survey, said: “Rising energy costs represent a major threat to growth and could damage efforts to support and sustain long term recovery.”
Energy prices have risen dramatically in recent years and look set to do so for years to come. In addition to this, the UK has gone years without a robust energy policy and now businesses are literally paying the price as the government belatedly develops our energy infrastructure to cope with the demands of the 21st century.
Ahead of the Treasury’s 2015 Budget on March 19th, EEF is calling for a freeze and then a cut of the carbon price floor – a British tax on fossil fuels generating electricity.
But don’t hold your breath. Instead, there are steps UK businesses can take to minimise energy costs and remain competitive while the government puts together a framework for our long-term energy needs.
In short, businesses need their own energy strategy that simplifies energy management, allows optimisation of costs and a flexible and responsive approach to markets. There are four cornerstones to this:
- Energy market dynamics
- Energy supplier assessment
- Site portfolio organisation
- Energy contract management
Energy market dynamics
Energy markets are highly volatile because they are influenced by so many global and local factors, from unrest in oil producing countries to the Great British weather. This provides businesses with the opportunity to buy when prices are low but they must constantly monitor market trends.
Energy supplier assessment
There are numerous energy suppliers, each with a myriad of different contracts. Most of these are very complex and many are littered with pitfalls for those in unfamiliar territory. To get the best deal you must be fully aware of the contracts available and understand them.
Site portfolio organisation
Many businesses with multiple sites have numerous energy contracts which, if simplified, would not only save considerable management time but also provide valuable leverage when negotiating with energy suppliers.
Energy contract management
Understanding what needs to be done through the life of an energy contract and acting upon it is vital but sadly, it is perhaps the most frequently overlooked aspect of energy management.
Some larger businesses now employ specialist energy managers to run this increasingly complex area of their business. A better option for some may be to work with a team of energy purchasing specialists with skills and experience in the manufacturing sector, but if you choose this option here are three things you must do:
Do make sure any energy consultants you consider are truly independent; do avoid long-term contracts that tie you in to a consultancy and do make sure of their reputation.
And there’s also one final ‘Don’t’. Don’t do nothing.
For further independent energy advice for your business, contact UES Energy at info@uesenergy.co.uk or visit www.uesenergy.co.uk.