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Listen to any news bulletin and there’s a good chance you’ll hear a reference to the effects of rising energy costs – something that has been exacerbated by the war in Ukraine.
It’s a significant problem for businesses across Europe at present, with many energy-intensive businesses having to make difficult decisions over whether to increase costs for customers.
In Germany, France, Spain, the UK and the Netherlands, the average cost of power (for short-term delivery) spiked more than 200% year-on-year in 2021.
Against a backdrop of supply chain disruption and volatile costs across many other parts of the economy, the increasing cost of power is creating significant problems for many.
However, I believe that these challenges also present a major opportunity for businesses to embrace new strategies when it comes to how they manage their energy usage.
A moment for positive change
As the cost of securing energy from the grid soars – especially for those using large amounts of power at peak times – the case for implementing alternative energy management solutions tips towards the category marked ‘no brainer’.
Whether it’s on-site renewable generation and storage – something we’re seeing rapidly increasing demand for from Centrica customers – or fixed-power purchase agreements from purpose-built solar or wind farms, businesses are increasingly making the move to green energy. These approaches are also being encouraged by the government, as outlined in the British Energy Security Strategy, published earlier this year.
The good news is that modernising energy management practices will not only help businesses navigate the cost rises, it will also give them a head start in the journey towards decarbonisation.
As decarbonisation becomes the new normal, it will increasingly be expected by customers, employees and shareholders. It’s about more than just cost – in the long run, net zero planning helps towards security of supply, clean and affordable energy and a sustainable future for the company itself. It future proofs the business.
Preparing for a zero-carbon future
The energy crisis is a good moment for businesses to take stock and explore where to invest in energy cost savings. It could be large or small changes – such as implementing LED lighting, a new supply contract or investing in an onsite Combined Heat and Power (CHP) plant – but any small steps can make a big difference in the long term.
The business case for CHP has transformed over the last two years, with return on investment now coming within six months of implementation in many cases, as opposed to three years in the past. Such returns can help either navigate the increased cost to serve customers, or help rocket-propel investment in other eco technology.
Businesses stand on the verge of a new era of change, something that many CEOs and COOs are beginning to realise. They will be more resilient and in a better position if they start to build out clean, low-carbon or zero-carbon energy now, instead of waiting until they are forced into it by regulation or dramatic increases in carbon pricing.
Ultimately, the years ahead will see growing pressure on businesses to cut carbon, as the government builds on the Net Zero strategy issued in 2021 calling for businesses to publish their decarbonisation plans by 2023.
The current energy crisis represents an opportunity to make big changes to the way you use energy as a business and put you on the path towards net zero.
With rises in costs set to continue, and financial incentives for decarbonisation likely to be increased in the medium-term, a little investment now could pay major dividends in the years ahead.
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