Net zero: can the UK reach its 2050 target?

In June 2019, parliament passed legislation requiring the government to reduce the UK’s net emissions of greenhouse gases by 100% relative to 1990 levels by 2050. This would make the UK a ‘net zero’ emitter.

This was once seen as a fairly ambitious target. Especially considering the previous commitment to an 80% reduction within the same timeframe. However, it has now become clear that achieving net zero by 2050 is imperative to tackling the catastrophic effects of climate change.

How close is the UK to reaching net zero?

To reach ‘net zero’, the UK must significantly reduce its emissions while simultaneously offsetting those that can’t be avoided. In this effort, the pandemic served as a hidden blessing. Thanks to reduced traffic, travel, waste and energy consumption, there was a record-breaking 10.7% fall in the UK’s carbon emissions in 2020. This resulted in a 48.8% reduction in greenhouse gas emissions from 1990 levels, a milestone in the country’s net zero journey.

Yet despite this, the UK is set to breach its fifth carbon budget by at least 313Mt of carbon dioxide equivalent (CO2e) according to research done by Green Alliance. And as workplaces open and travel resumes again, emission levels could return to pre-Covid levels. This could make meeting the sixth carbon budget, which recommends a reduction of 68% by 2030, challenging.

Is this achievable?

A recent report by The National Grid Electricity Operator (ESO) outlines 4 potential scenarios for decarbonisation in the UK. These were designed in part to lay out steps to meet the sixth carbon budget, and 3 of the scenarios see us reaching net zero by 2050. But, while this sounds promising, the report also explains that drastic changes are required to achieve future emissions targets.

The National Grid ESO’s head of strategy and regulation Matthew Wright said, “Our latest Future Energy Scenarios insight reveals a glimpse of a Britain that is powered with net zero carbon emissions, but it also highlights the level of societal change and policy direction that will be needed to get there.

“If Britain is to meet its ambitious emissions reduction targets, consumers will need a greater understanding of how their power use and lifestyle choices impact how sustainable our energy system will be – from how we heat our homes, to when we charge our future cars – and government policy will be key to driving awareness and change. 

“Britain is making significant progress towards achieving net zero. The fundamental changes outlined in our latest FES insight show just how important a coordinated approach will be between policymakers and industry if we’re to capitalise on that momentum.”

What does this mean for businesses?

The UK ramping up its decarbonisation efforts will impact businesses and communities of all sizes. If the recently published Transport Decarbonisation Plan is any indication of policies to come, the general public should prepare for drastic changes. The plan outlines the Government’s approach to decarbonising the highest-emitting sector. It includes bringing the ban on petrol and diesel cars and vans forward from 2035 to 2030. As well as a consultation on zero-emission bus fleets and lorries by 2040.

Other expected changes could include higher energy efficiency standards and extended mandatory carbon reporting. A recent example of this is the extension of mandatory display of annual energy certificates in all larger office buildings. This means that businesses will have to prioritise their energy management in the future. Fortunately, reducing waste and boosting your green credentials often results in both financial and reputational benefits.

How can EIC help?

At EIC we help businesses monitor and manage their energy and carbon with sustainability in mind. Our in-house team can guide you through energy monitoring, carbon footprinting, green procurement and compliance legislation. We are already partnering with leading UK private and public sector organisations – supporting them to transform their operations in line with ambitious targets.

Our aim is to provide you with holistic energy management and sustainable solutions. Helping to carry your business into a green future.

Contact us at EIC for a bespoke net zero roadmap for your organisation.

Mandatory display of annual energy certificates to be extended

In a new scheme proposed by the government, all larger commercial and industrial buildings will be mandated to display annual energy certificates. This will initially affect offices over 1,000m2of which there are approximately 10,000 in England and Wales. However, the proposal includes plans to extend to more varied sites in the future, including smaller buildings. So, why the change and how might it impact businesses in the UK?

What does the proposal include?

Currently, large commercial buildings are required to display an Energy Performance Certificate (EPC) only if their total useful floor area is over 500 square metres, is frequently visited by the public, and an EPC has already been produced for the building’s sale, rental or construction. EPCs measure the building emission rate (kgCO2/m² per year) and primary energy use (kWh/m² per year) for the core HVAC and building fabric assets.

EPCs are valid for 10 years, once an EPC reaches the ten year point and expires, there is no automatic requirement to produce a new one. A further EPC will only be required when the property is next sold, let or modified.

In October 2019, the Government told the Climate Change Committee that it would consult on introducing a new scheme that would rate commercial and industrial buildings based on their actual energy consumption and carbon emissions.

As a result of this, the government launched a new consultation called ‘Introducing a Performance-Based Policy Framework in large Commercial and Industrial Buildings in England and Wales’. This is the first step towards introducing a national performance-based policy framework that aims to reduce energy consumption and emissions.

How does this differ from DECs?

A Display Energy Certificate (DEC) rates public sector buildings over 250m2 based on actual energy consumption, so why not simply expand this to commercial buildings? According to the proposal, the new rating framework will look to modernise and go beyond what (DECs) currently offer.

Why the change?

Larger office buildings use over 53% of the energy used by all commercial and industrial buildings. This means that more frequent audits and stricter oversight will help to root out waste and reduce overall consumption. Success from similar policies has already been seen in countries like Australia who reduced consumption by 34% in 10 years with the National Australian Built Environment Rating System.

In this global push for energy efficiency and retrofitting, the UK is falling behind. Since 2016, similar requirements have been mandatory in all non-residential buildings over 500m2 throughout the European Union.

What are the benefits of the proposal?

Mandating more frequent energy evaluations will help to identify areas of inefficiency or, at the very least, raise awareness around energy consumption. While retrofitting the UK’s predominantly old building stock is a daunting task, the benefits could be enormous. This initiative alone is predicted to save British businesses over £1 billion annually and reduce carbon emissions by 8m tonnes when completed.

The Government is also considering including waste, water usage and air quality standards. None of these are currently required for either EPCs or DECs, and could lead to further cost savings for businesses.

How can EIC help?

The government plans to introduce the new rating system in 3 phases over the 2020s. The 1st phase is aimed at the office sector and has been planned to start in April 2022. EIC helps its clients stay informed and prepared for policy shifts such as these. In a net zero economy, staying ahead of the curve will be crucial to business resilience and growth.

As emission reduction targets become more important, energy reporting will become an essential part of managing a successful business or property. EIC can help you stay compliant with fast-changing legislation by streamlining and simplifying any and all of your energy admin. Our energy specialists have extensive experience with EPBD requirements including DECs, EPC and TM44 certification. We can go beyond mandatory reporting and certification to ensure you are as sustainable and energy-efficient as possible.

EIC can help you stay ahead of the curve. To find out more contact us today.

UK ETS: what you need to know about reporting

The UK was a founding member of the EU Emissions Trading Scheme when it first launched in 2005. As the world’s first major carbon market, it was designed to incentivise the reduction of carbon emissions in a cost-effective way. Following Brexit, the UK established its own Emissions Trading Scheme (UK ETS) to further drive down emissions and maintain the UK’s competitiveness in a green global market.

How does the UK ETS work?

The UK was influential in the design of the EU ETS. So, it came as no great shock that when the UK ETS launched in May 2021, it looked very similar to its predecessor.

The system still works on the ‘cap and trade’ system. This means that a cap is set on the total amount of certain greenhouse gases that can be emitted by installations covered by the system. The cap is reduced over time so that total emissions fall in line with the UK’s net zero target.

This cap is converted into tradable emission allowances. For each allowance, the holder has the right to emit one tonne of CO2 (or its greenhouse gas equivalent). After each year, large energy users must give up enough allowances to cover all their emissions or face a fine.

What does it mean for companies that apply?

Facilities with installed combustion equipment above the 20MWth threshold are required to monitor and report their emissions each year. They then must surrender allowances to cover their reported emissions.

A portion of allowances will be issued for free to eligible installations (typically energy intensive industries or aviation). This follows the same approach as the EU ETS. If they are likely to emit more than their allocation, companies can take measures to reduce their emissions or buy additional allowances.

If a company decides to reduce its emissions, it can keep the spare allowances to either use the following year or sell them on. In this way, the ETS helps to monitor emissions from energy intensive industries and incentivises carbon conscious strategies. And it’s been a successful driver of reductions. Between the launch of the EU ETS in 2005 and 2019, emissions from installations covered by the scheme have declined by about 35%.

This is promising progress for the fight against climate change, and the UK ETS is expected to be even more ambitious in readjusting its cap. This will mean tighter restrictions on emission reductions in future carbon reporting, especially for big energy users.

uk ets timeline

How can EIC help?

EIC has a team of dedicated Carbon Consultants and Data Analysts who provide an all-encompassing UK ETS service. We provide you with guidance and support: interpreting complex legislation and keeping you up to date with any policy shifts. You will be assigned a dedicated Carbon Consultant who will help you navigate the reporting and compliance process with ease.

Our in-house carbon team has extensive experience with reducing energy consumption, costs and emissions for our clients. This means we can keep you ahead of the curve and prepare your business for future reporting requirements.

To learn more about how EIC can help you with reporting for UK ETS, contact us today.

Science-Based Targets: everything you need to know

Some large corporations are leading the way in a bid to tackle climate change with science-based targets. What are the benefits of committing to these emissions reductions and how can your business get involved?

WHAT ARE SCIENCE-BASED TARGETS?

Science-based targets came about as a result of the Paris agreement in 2015. In this legally binding treaty, 195 parties committed to limiting global warming to below 2 degrees Celsius compared to pre-industrial levels. Then in 2018, the Intergovernmental Panel on Climate Change said that global warming should not exceed 1.5 degrees Celsius.

To achieve this, GHG emissions must halve by 2030, and drop to net zero by 2050. A ‘science-based’ emissions target stays in line with the scale of reductions required to meet these objectives. These goalposts track progress and give the private sector a clear idea of how quickly they need to reduce their GHG emissions to prevent the worst impacts of climate change.

In the global race towards net zero, science-based targets will become crucial for business growth across the sectors. Not only do they help tackle climate change, but they boost a company’s competitiveness in a changing market.

A UNITED INITIATIVE

The Science Based Targets initiative (SBTi) was set up by CDP, World Resources Institute (WRI), the World Wide Fund for Nature (WWF), and the United Nations Global Compact (UNGC). The group supports companies that have set science-based targets. They have found that the positive effects for these businesses include increased innovation, strengthened investor confidence and improved profitability.

The STBi also:

  1. Defines and promotes best practice in science-based target setting via the support of a Technical Advisory Group.
  2. Offers resources, workshops and guidance to reduce barriers to adoption.
  3. Independently assesses and approves companies’ targets.

WHAT ARE THE BENEFITS OF SETTING SCIENCE-BASED TARGETS?

There are many benefits to setting science-based targets. By significantly reducing emissions, you are not only building a brighter future for the planet but a potentially profitable one for your business.

Here are some of the benefits of setting science-based targets:

  • Illustrate excellent CSR – For large corporates there is a growing responsibility to take action against climate change, science-based targets are a way to do this.
  • Deliver a competitive advantage – Integrating environmental policies into your business strategy helps your business stand out in a crowded marketplace.
  • Involve the whole company – Engage with internal and external stakeholders to help your business achieve or even exceed targets.
  • Reduce large costs – Lowering emissions often requires a closer look at your energy portfolio and making your utilities as efficient and low carbon as possible. This can result in significant savings for your business.
  • Investor confidence – 52% of execs have seen investor confidence boosted by targets. As TCFD recommendations come into play and climate-related risks become more important, this will only become more prevalent.
  • Increase innovation – 63% of company execs say science-based targets drive innovation.

HOW DO YOU SET A SCIENCE-BASED TARGET?

There are three approaches to setting a science-based target (SBT):

  1. Sector-based approach – The global carbon budget is divided by sector and emission reductions allocated to individual companies based on its sector’s budget.
  2. Absolute-based approach – All companies will equally work towards the same per cent reduction in absolute emissions.
  3. Economic-based approach – A carbon budget is equated to global GDP and a company’s share of emissions is determined by its gross profit since the sum of all companies’ gross profits worldwide equate to global GDP.

HOW CAN BUSINESSES GET INVOLVED?

For a business to get involved in the initiative there is a simple 4 step process to follow:

  1. Submit a letter to say you are committed to the scheme.
  2. Develop your own science-based target within 24 months.
  3. Submit your target for validation.
  4. Announce your target.

838 companies are currently taking science-based climate action and 343 companies have approved science-based targets.

HOW EIC CAN HELP

We can help you create science-based targets as part of a Carbon Management Plan that can also incorporate net zero goals. We are already partnering with leading UK private and public sector organisations – supporting them to transform their operations in line with ambitious targets. These will help them future-proof their business and help save the planet.

EIC can assist in meeting your science-based targets by:

  • Establishing your carbon footprint to act as your baseline
  • Provide recommendations to reduce your carbon impact
  • Set your target to reduce your carbon footprint to meet the 5°C objective
  • Create an ongoing Carbon Management Plan
  • Create and publish all documentation required for the scheme
  • Work with you to embed the strategy into your business
  • Assist you with carbon offset strategies

To learn more about EIC’s carbon and net zero services, contact us today.

Earth Day: 5 things businesses can do to celebrate this year

After months of isolation and wintry weather, spring is finally in full bloom and the UK is reopening again. With this recent freedom has come a renewed appreciation for friends, family, and the great outdoors. This, and the rise in climate change awareness, make this Earth Day more important for businesses than ever.

Environmental awareness days are often marked with a social media post and quickly forgotten. But businesses that embrace real sustainability all year can enjoy significant financial and reputational benefits. As the UK transitions to a net zero economy, this will only become truer.

Companies with ethical and environmental strategies are already favoured by consumers and investors. This makes a sustainable strategy essential for securing future funding as well as growing and maintaining a loyal customer base. Not to mention, energy efficiency and clean energy solutions can provide valuable savings to facilitate further stability along the way.

This Earth Day, why not use the momentum to embark on your sustainable journey? Here are a few ways to celebrate the planet and ensure a green future for your business.

1.  Make a commitment

Companies and communities across the UK are pledging to reach net zero emissions by as early as 2030. This is largely due to recent shifts in policy that have made carbon monitoring and reporting an inevitable part of business practices. Climate-related risks are also beginning to play an important, even mandatory, role in investment decisions. This means large companies will have no choice but to reduce their environmental footprint.

What better day to announce your businesses commitment to net zero than Earth Day? EIC can help your organisation navigate the path to net zero from your initial carbon footprinting onwards. Our team of energy specialists streamline complex energy admin, carbon compliance, and give guidance on clean energy solutions. We go beyond what is mandatory to integrate sustainability into the core of your business.

2.  Embrace small changes

If your business is not ready to commit to a net zero target, there are numerous small changes you can make to save money and reduce your environmental footprint. Simply switching to LED lights can result in significant costs savings, especially for big energy users with extensive office or retail space. This and other efficiency solutions offer emission reductions that will prepare your organisation for future carbon reporting requirements.

Waste management is another important small but impactful change, as is water efficiency. Taking control of your utilities and ensuring there is as little unnecessary waste as possible is the first step towards sustainability.

3.  Switch to green energy

As companies and councils continue to join the race to net zero, energy suppliers are offering more green procurement options. There are different types of energy contracts in various shades of green, and choosing one can be a complex process.

If you are taking this Earth Day to switch to greener energy, EIC can help. Our procurement specialists can help you choose the contract that is right for your organisation and your net zero goals.

4.  Get smarter

Data gathering and analytics is the future of energy management. Smart energy monitoring and building control systems identify areas of inefficiency and waste. And enable you to make changes in real time. This technology is already becoming widely used to help businesses of all sizes control their costs and reduce emissions.

Make a real, impactful change this Earth Day by taking control of your utility usage. Our sister company, t-mac, offers next-generation metering, monitoring and controls solutions. These enable clients to manage their assets and energy consumption in real-time via a single platform.

“By working with t-mac we were able to identify that our immediate solution was to scrutinise the use of in-store equipment to save energy and carbon. Using t-mac’s expert advice and assistance we were able to implement a control strategy and immediately benefited from the energy reduction. To date, we’ve chalked up a substantial reduction in energy usage and carbon emissions across the 1,600 UK branches. We’re confident that the system will continue to be a winner, saving carbon and cost for years to come.” – Nick Eshelby, Director of Property Services at Ladbrokes

5.  Make it a team effort

Making structural changes to your energy portfolio is key. But genuine sustainability requires action on every level. Getting employees involved can help your sustainable efforts and also boost morale.

In August 2020, Reuters commissioned Censuswide to survey 2,000 UK office workers about workplace culture and environmental ethics. Of those surveyed, almost two-thirds (65%) said that they were more likely to work for a company with strong environmental policies.

This proves the rising interest in climate change and social equity is impacting peoples expectations of their employers. And as younger generations enter the workforce, this will only become more prevalent.

This Earth Day, ensure employees are aware of your commitment to environmental action by getting them involved in your sustainable business strategy. One way to do this is through EIC’s staff energy awareness training, which teaches employees how to reduce energy usage. By helping your employees understand how they can improve energy efficiency at work, they’ll learn how to cut their usage and costs at home too, which is great news for the environment.

How can EIC help?

At EIC we celebrate Earth Day every day by leading clients towards a more sustainable energy future. Our in-house team can guide you through energy monitoring, carbon footprinting, green procurement and compliance legislation. Our aim is to provide you with holistic energy management and sustainable solutions that build a green and resilient foundation for your organisation’s future.

To learn how our net zero services can help your business, contact us at EIC today.

Triad demand rises despite winter lockdown

National Grid have published the three Triad dates for the 2020/21 season, which are listed in the table below. For a ninth consecutive year EIC has successfully called an alert on each of these days.

EIC hit all three Triads with only 14 Red alerts issued.

There was an increase in the number of Triad calls this year with 24 alerts issued in total. This compares favourably with other suppliers who called an average of 30 alerts across the Triad period.

triad dates

Triads are three half-hour periods with the highest electricity demand between the start of November and the end of February. Each Triad must be separated by at least 10 clear days. This means consecutive days of high demand won’t result in multiple Triads. If consumers are able to respond to Triad alerts by reducing demand then they will be able to lower their final transmission costs.

First increase in peak demand for 6 years

This winter saw the first increase in peak demand since 2014/15 and the largest year-on-year increase since 2007/08. There are a number of factors which contributed to this including lower temperatures, a reduction in demand-side response and an increase in domestic consumption. While peak demand increased from last winter, average demand decreased by around 2%.

The rise in coronavirus cases at the start of the winter led to the Government imposing further lockdown measures. This led to a reduction in the number of businesses reacting to Triad calls and reducing demand at peak times. Our analysis has suggested there was up to 1GW less demand-side response than the previous winter. The lockdown also signalled a return to home schooling and working from home which subsequently increased domestic consumption. This increase was mainly driven by lighting and heating which are typically less efficient in homes than in schools and businesses.

The trendline below shows that weekday peak demand over the Triad period increased by an average of 0.5GW for every 1°C decrease in average temperature. Some of the variation in the graph can be explained by the two national lockdowns that were in place over most of the Triad period. Our analysis of the temperature-corrected data has shown that peak demand increased by around 4-5% once lockdown conditions were lifted in December. This coincided with a drop in temperatures leading to the first Triad on 7th December.

temperature vs demand graph

Cold January leads to increase in demand

The Triad season started with long periods of mild weather during November and most of December. Temperatures fell after Christmas which led to the coldest January since 2010 and the second coldest in the past 24 years. This is in stark contrast to January 2020 which was the second mildest in the past 30 years. Across the Triad season eight weekdays had an average temperature below zero, all of these occurring after Christmas. This compares to none the previous winter and only two for the 2018/19 winter.

The graph below shows that the first Triad fell on the only day before Christmas with an average temperature below 2°C, while the second and third Triads occurred during longer cold spells during the start of January and February. Wind generation continued to have an impact on peak demand as embedded generation is not connected to the grid and is instead seen as a drop in demand. All three Triads occurred on days when wind generation was less than 5GW as the drop in demand from embedded wind generation was reduced.

temperature energy price graph

TCR Final Decision

In December 2019 Ofgem published their final decision on the Targeted Charging Review (TCR), although the implementation date has since been delayed by a year due to the coronavirus pandemic. The main outcome of this decision is that from April 2022 the residual part of transmission and distribution charges will be levied in the form of fixed charges for all households and businesses. This means that there is one final chance for consumers to benefit from Triad avoidance over the 2021/22 winter period.

The TCR aims to introduce a charge that Ofgem considers is fair to all consumers and not just those able to reduce consumption during peak periods. For the majority of consumers these changes will lead to a reduction in transmission costs. However, for those who are currently taking Triad avoidance action it is likely that their future costs will rise.

Impact on Consumers

The graph below shows the average % change in DUoS and TNUoS costs across each region and meter type as a result of the TCR. Our analysis has found that most half-hourly (HH) sites will benefit from a fall in costs, however most domestic and non-half hourly (NHH) sites will see a small rise in costs. Southern areas will typically benefit from a larger decrease in costs than northern areas.

Consumers currently taking Triad avoidance action are likely to face an increase in TNUoS costs from Apr-22 as the effect of Triad avoidance is removed. Likewise, sites that have a capacity level set too high will also not benefit from the same level of cost reductions shown below as they are potentially placed in a higher charging band.

TCR graph

How EIC can help

With the confirmation that from April 2022 residual charges will be calculated using a capacity based methodology, now is the perfect time to undertake a capacity review on all of your HH sites. EIC’s Capacity Review service is a fully managed end to end offering. We undertake detailed analysis for each of your sites, outline potential savings and offer clear advice on what action you should take. If we find that your capacity can be reduced by more than 50% it may also be possible to apply for a charging band reallocation which could significantly cut your future DUoS and TNUoS charges.

EIC can also help you accurately budget and forecast your energy prices with confidence with our Long-Term Forecast Report. Our team of specialists work hard identifying trends, examining historical figures and forecasting for the future. The Long-Term Forecast Report is a valuable tool which illustrates the annual projected increases to your energy bills and calculates your energy spend over the next 5, 10, 15 or 20 years. This allows you to confidently forward budget and avoid any nasty surprises. Whilst we can’t prevent the rise of non-commodity charges, we can ensure you are fully prepared for the increases.

What is driving corporate sustainability?

Rising interest in climate change means businesses are facing increased scrutiny over the environmental and social impacts of their practices. Mandatory carbon reporting already makes corporate sustainability obligatory for many big energy users. And securing funding in the future may entirely rely on a company’s ESG strategy thanks to financial guidelines like the TCFD.

Fortunately, there are many benefits to embracing corporate sustainability beyond ticking boxes. An organisation’s green credentials will only rise in value as the UK races towards its net zero target. Not to mention, at the heart of decarbonisation and sustainability is energy efficiency, which can uncover considerable cost savings.

There are various forces driving corporate sustainability, including a shift in consumer behaviour, policy changes and more ambitious government targets. These forecast a more permanent transformation in the business and finance sectors.

The race to net zero

The real fuel behind the environmental movement at the moment is the global race to net zero. Over the past year, the UK government has introduced new policies and plans to achieve net zero emissions by 2050. This includes new energy efficiency standards, increased renewable generation, hydrogen development, and a ban on petrol vehicles from 2030.

What is clear is that the green wave is coming.  To stay competitive, businesses will have to create sustainable strategies that prepare them for a net zero economy.

EIC can be your partner in this journey, from the first energy audit through to accreditation. Along the way, we help manage all your energy admin and take the stress out of complex carbon legislation. The path to net zero can be difficult to navigate, but our experienced in-house team of energy specialists provide end-to-end simplification. Giving you peace of mind, and your organisation a green, resilient future.

The Task Force on Climate-related Financial Disclosures (TCFD)

In November 2020, Chancellor Rishi Sunak announced plans to make alignment with the TCFD guidelines mandatory in the UK. This will apply to most sectors of the economy by 2025 including listed companies, banks, and large private businesses.

The Task Force on Climate-related Financial Disclosures was established in 2015 by the international Financial Stability Board. It is based on the growing consensus that climate change has immediate effects on economic decisions.

This new step towards mandatory transparency will require a more holistic view of a company’s environmental footprint. It also confirms that investors are growing more aware of climate-related risks and are putting more faith in organisations that plan ahead. For this reason, it can be beneficial for organisations to follow TCFD guidelines, whether they are obligated to do so or not.

Impact investing and the rise of ESG

Environmental, Social and Governance strategies are not new to the corporate sector, but they have become more important in recent years. Now with a heightened focus on climate change and social justice, ESG is becoming essential for securing future investments.

This goes hand-in-hand with the rise in impact investing, which goes beyond mitigating risks and asks – how is your organisation positively impacting the planet? This trend has seen a rise in companies with social or environmental missions.

Why choose true sustainability?

The rise in climate action has led to some companies ‘greenwashing’. This is essentially when a company markets themselves as being ‘green’ without taking real action to reduce their environmental footprint.

There are many benefits to genuine environmental sustainability. The most important being an organisation’s longevity in a changing market.

If the recent shift in policy and finance has taught us anything it is that total transparency will be essential in the future. While ‘greenwashing’ may have some rewards now, it is poor preparation for a net zero economy. And though it may be cheaper in the short term, organisations that are ignoring their energy efficiency are missing out on significant long term savings.

Why choose EIC on your journey to net zero?

At EIC we know that building an environmentally and ethically sound business is not only the smart thing to do, it is the right thing to do. Our in-house team can guide you through energy monitoring, carbon footprinting, green procurement and compliance legislation. Our aim is to provide you with holistic energy management and sustainable solutions that boost your green reputation and financial savings.

Contact us at EIC for a bespoke net zero roadmap for your organisation.

Targeted Charging Review (TCR) Guide

The Targeted Charging Review (TCR) was launched by Ofgem in 2017 to reduce distortion across the network. We look at how these changes will impact consumers and how we can help businesses prepare.

What does the review include?

Changes to DUoS and TNUoS

Distribution Use of System (DUoS) and Transmission Network Use of System (TNUoS) charges cover the costs of maintaining the electricity networks that supply your energy. Ofgem will be implementing changes to these charges to ensure that costs are distributed fairly.

This means that from April 2022 a proportion of your DUoS and TNUoS charges will depend on a series of voltage-based bands.

Transmission charges (TNUoS) for non-domestic consumers will be based on a series of fixed charging bands set for the whole country. For distribution charges (DUoS) domestic consumers will pay a single residual charge set for each distribution area. Non-domestic consumers will be charged based on a set of fixed charging bands also set for each distribution area.

Bands for non-domestic customers will be determined by a consumer’s voltage level during the 24-month period ending in 2020. Some consumers may need further segmentation. For larger consumers, these boundaries can be defined based on the agreed capacity. And for smaller consumers, these can be based on net consumption volume.

The series of fixed charging bands will be published at a national level and set for each Distribution Network Area. Ofgem will review and may revise these charging bands and their boundaries so that they can be implemented alongside new electricity price controls.

Changes to Triads

The review will also remove the Transmission Generation Residual embedded benefit (Triads) from April 2022.

Triad periods are the three highest winter peak periods. They are retrospectively calculated in March each year and form the basis of the transmission network component (TNUoS) of large companies’ energy bills. By reducing consumption or switching to onsite generation during suspected Triad periods, some firms can save large amounts of money on their bills.

Ofgem believes that removing Triads is an appropriate compromise between addressing the largest distortions in the market and reducing the distributional impacts on consumers.

This leaves one final Triad season to take place over winter 21/22. Beyond that, there will no longer be any incentive for Triad avoidance. And companies that were taking action to reduce costs during Triad periods could see an increase in their electricity bills.

What impact will this have on consumers?

The TCR changes are set to benefit larger consumers with half-hourly (HH) meters whilst domestic and NHH sites will see a small rise in costs. Consumers outside of London are expected to experience a rise in DUoS fixed costs. These will be partially offset by a decrease in DUoS unit costs. Most HH sites may also benefit from a drop in TNUoS costs. Whereas domestic and NHH sites face a potential rise in TNUoS costs.

The graph below shows that southern areas are more likely to see a larger decrease in costs than northern areas. HH sites in London, for example, will see TNUoS and DUoS costs decrease by an average of 40%. Whereas HH sites in Scotland will only see an average decrease of 7%. Incidentally, London is also the only area where domestic and NHH sites will see a net benefit from the TCR changes.

Consumers currently taking Triad avoidance action are likely to face an increase in TNUoS costs from April 2022 as that benefit ends. Likewise, sites that have a higher capacity level will not see the cost reductions shown below as they could be placed in a higher charging band. Extra-high voltage sites are not included in the graph below as they are subject to site-specific tariffs and need more detailed analysis.

tcr graph

DUoS and TNUoS costs make up around a quarter of the average electricity bill so the % change in total costs is shown on the right-hand axis.

How EIC can help

The figures calculated above are based on an average consumer in each charging band. The analysis covers a wide range of consumers with varying demand profiles and cannot simply be applied to individual consumer costs.

The best way to determine exactly how the TCR will affect your business is with our Long Term Forecast Report. This provides your business with a specific breakdown of electricity costs over a 5, 10, 15 or 20 year period. This valuable report will allow you to confidently plan your long-term budget and avoid any nasty surprises.

To learn more read about our Long Term Forecast Report or contact us today.

SECR: How to make it work for your business

Compliance with carbon legislation such as Streamlined Energy and Carbon Reporting (SECR) has become a corporate obligation. But it can also unlock a range of opportunities for businesses seeking sustainable growth.

This is because the energy audit and reporting involved in carbon compliance can gather valuable data. This can then help to unearth hidden financial savings by highlighting areas of inefficiency and waste. Not to mention, sealing those leaks to reduce carbon emissions.

So, while it is often seen as a tedious piece of admin, SECR can help organisations prepare for the UK’s transition to a net zero economy. Smart energy management can also help to build a resilient foundation for any future business.

Here are some of the hidden benefits businesses are privy to if they make the most of SECR.

Getting more out of your energy audit

If your organisation falls within the scope of SECR, your energy and carbon reporting is already a priority. But the data collected has value far beyond mandatory compliance.

Submetering and monitoring provide a window into the performance of your building. Helping to pinpoint any weaknesses and inefficiencies in your systems. This holistic view of your energy use and carbon emissions can help you build a smarter, data-driven sustainable strategy.

With the next-generation technology available today, you can go beyond the data and incorporate smart controls. Our sister company, t-mac, offers Building Management Systems (BMS) that enable real time insights with IoT technology. For big energy users, this is an invaluable energy management tool for streamlining carbon compliance processes.

Ignoring this data after the initial report would mean that you risk wasting time and money on energy admin. It would culminate in nothing more than standard compliance.

Preparing for future Scope 3 reporting

Currently, organisations are mandated to report on only scope 1 and 2 emissions.

Scope 1: Direct emissions from company operations such as company vehicles or factories

Scope 2: Indirect emissions from company operations such as purchased electricity generated by fossil fuels

But it is a long road to net zero, and scope 3 emissions will likely become a part of mandatory reporting before 2050.

Scope 3: Indirect emissions from company supply chains such as shipping, business travel, and raw material extraction

By making the most of your current reporting you can prepare your organisation for future compliance. This gives you an advantage over your competitors and helps mitigate any risks, and costs, involved in last-minute reporting.

Boosting your green credentials

Businesses are waking up to the rapidly evolving corporate landscape and the growing focus on transparency. With climate change now being widely recognised as a global challenge, it is clear that every industry will have to innovate and adapt. Any organisation’s growth and longevity will increasingly rely on its levels of sustainability and environmental, social and governance. Both at a leadership level but also embedded in the corporate identity as a whole.

SECR compliance spans areas like energy management, sustainability, and financial reporting. This challenge can be transformed into an opportunity by establishing open communication between teams and forming a more cohesive SECR team.

When EIC helps a client navigate complex carbon legislation, we go beyond compliance. By establishing a long-lasting sustainable strategy for your team, we help to incorporate green values into every part of your corporate identity.

Beyond compliance, genuine sustainability will become an expectation among employees, customers and stakeholders. While greenwashing is widespread now, with companies cashing in on the climate-friendly trend, this won’t be an option for long. With transparency made mandatory and rising interest from the general public, companies will struggle to hide their skeletons.

SECR can help you begin your sustainable journey by rallying your team around your environmental mission.

How can EIC help?

At EIC, we provide businesses with end-to-end guidance and support for carbon compliance including EPBD, ESOS and SECR. Our dedicated carbon consultants have supported over 300 organisations, many of them are big energy users with complex energy admin. Our goal is to simplify and streamline your energy management from utility connections to net zero guidance.

If you want to understand how to put the findings from your SECR reporting to good use or need to begin the reporting process, contact us at EIC today.

A step-by-step guide to setting up new connections

Refurbishing your premises or expanding to new sites can add complex and time-consuming energy admin to your workload. EIC takes the stress out of this process, coordinating your organisation’s new utility connections in a seamless and hassle-free way. Here is a step-by-step guide of what to expect and prepare for on your new connections journey.

Step 1: Register

The first step is to register your requirements with the relevant parties. This is a good time to reach out to an energy specialist at EIC. We will guide you through the process, answer your questions and translate the technical jargon.

Step 2: Gather information

Moving forward, we will need some details including an idea of your estimated energy usage and your Meter point numbers. For electricity, you will need the Meter Point Administration Number (MPAN) which you can get from your local electricity distributor. For gas, you will need the Meter Point Reference Number (MPRN). For this, simply call the MPRN enquiry line. Alternatively, you can get this information from any bills you have received if it’s an existing supply.

If this is a completely new supply, you may not have received these yet, so don’t worry if you don’t have them.

At this point in the process, EIC will send a quote for the new connections service needed. If you are happy with it, we will follow up with a contract and dive in. Our goal is to power up your site or business as quickly and efficiently as possible.

Step 3: Infrastructure plans

Next, infrastructure plans will need drafting. This will mean applications, potential site work considerations, supply contracts and arranging for meter installation.

EIC provides peace of mind throughout this process by liaising with all respective parties and gathering all the necessary technical information. This includes location maps, building layouts, meter positions, and utility loading needs. If there are site works to consider, EIC can help provide temporary builder’s supply. We can also coordinate alteration or rerouting of supply with minimal disruption, and meter removals and disconnections.

setting up new connections

Step 4: Gas and power supply contracts

If you haven’t already, it is time to secure gas and electricity supply contracts. Having established relationships with a range of reputable suppliers, EIC can shop around for options that best fit your organisation’s needs. Whether you need a single connection or multi-site rollout, we can manage and deliver your power and gas requirements with ease. All the while, providing necessary updates and ensuring open communication and transparency.

Step 5: Meter Installation

After contacting the meter operator (MOP) to arrange the appropriate contracts, it is time to install meters and power up your business. EIC can simplify every aspect of this process and coordinate the design, planning and installation, upgrade or removal of your meters.

Your metering solutions will help decide the efficiency of your space and requires a thoughtful and comprehensive approach. EIC’s services extend beyond meter installations for new connections. We also provide everything from smart submetering to next-generation energy management systems. These solutions can help reduce energy costs and cut carbon emissions. Helping to build a sustainable foundation for your business from day one.

Once the meters are installed, we will make sure that they are registered and live on the national database.

Step 6: Bill validation

Once everything is up and running, it is time to run final checks and make sure you are not being overcharged. EIC helps to ensure the billing is accurate by confirming the first invoice received from the supplier reflects the agreed contract rates.

If we removed, upgraded or altered meters, we ensure the final invoice received from the supplier reflects the closing or opening meter readings respectively.

Step 7: Rest easy

By entrusting this process to EIC, project managers can now rest easy knowing that they have been provided with the most reliable, efficient and cost effective energy solutions.

Moving forward, a sustainable energy infrastructure will be essential for any growing business, especially as the UK transitions to a net zero economy. EIC can help you implement and use intelligent building strategies to cut your carbon footprint and boost your savings. This includes IoT building management systems, green lighting solutions, and carbon compliance services.

To begin, or boost, your sustainable energy journey with EIC, contact us today.

The EII Exemption Scheme: everything you need to know

What is the energy-intensive industries (EII) exemption scheme?

The EII exemption scheme aims to help big energy users stay competitive in a global market. Qualifying businesses can claim an exemption of up to 85% of their Contract for Differences (CfD), Renewables Obligation (RO), and Feed-in Tariff (FiT) costs. Providing firm financial footing in a post-Covid economy.

Why was the EII exemption scheme launched?

The UK has pledged to achieve net zero emissions by 2050, which will require a transformative shift towards clean energy across the economy. This has resulted in a variety of government schemes which encourage the rise of electricity generated from renewable and low carbon sources.

This initiative has seen success, with renewables accounting for 47% of the UK’s generation in the first quarter of 2020. And even as consumption dropped in Q2, wind power generated electricity continued to rise due to increased capacity. This upwards trajectory is only expected to accelerate, with promising new renewable energy projects on the horizon.

The levies and obligations funding this growth are initially covered by energy suppliers. But, these costs are passed down to domestic and non-domestic consumers in the form of higher energy bills.

This puts energy-intensive businesses at a disadvantage. Especially when competing against their EU counterparts with lower energy costs. The launch of the EII exemption scheme is a solution to this problem and aims to maintain the UK’s position in the global market.

When was the scheme rolled out?

The original solution to the issue of higher costs for EIIs was a compensation scheme launched in 2016. This allowed big energy users to apply for relief from the energy costs they had already paid.

This was then replaced by the EII exemption scheme, rolled out between autumn 2017 and spring 2018. This change of approach is meant to offer energy-intensive businesses more long time certainty and stability as well as higher cost savings.

eii

Who can apply?

To be eligible for an EII exemption, a business must meet five key requirements.

  • The business must manufacture a product in the UK within an eligible sector – the “sector level test”.
  • The business must pass a 20% electricity intensity test – the “business level test”.
  • The business must not be an Undertaking in Difficulty (UID) – the UID guidelines explain that “an undertaking is considered to be in difficulty when, without intervention by the State, it will almost certainly be condemned to going out of business in the short or medium term.”
  • The business must have at least two quarters of financial data.
  • The application must contain evidence of the proportion of electricity used to manufacture the product for a period of at least three months.

Learn more about applying for an exemption certificate.

Big energy users who do not qualify for the EII exemption scheme should still be aware of rising energy costs. They should explore schemes such as Carbon Footprinting, Energy Audits, Streamlined Energy and Carbon Reporting (SECR) and Energy Savings Opportunity Scheme (ESOS). These can provide invaluable insight into your environmental impact and routes to improve energy efficiency within your company.

Has Covid-19 had an impact on the scheme?

Covid-19 has thrown various sectors of the UK economy into a state of uncertainty and decline. The energy sector was especially impacted by the fall in energy consumption in the first six months of 2020. And resulted in a subsequent drop in electricity prices. This could make it more difficult to calculate a business’ energy intensity and whether it is “in difficulty”. Because of this, the government will be excluding the period from 31 December 2019 to 30 June 2020 from its assessment of whether a business is in financial difficulty or not.

How can EIC help?

Here at EIC, we support big energy users with the management of their energy, buildings, carbon and compliance. As a result, we’re able to uncover actionable insights that allow you to manage and control all elements of your energy bill on both sides of the meter.

Armed with a comprehensive understanding of government schemes and legislation, we can help turn your frustrating admin into rewarding opportunities. We can navigate complex applications such as that for the EII exemption certificate – saving you valuable time and resources.

Contact us to learn more about how EIC can help your business.

2021 outlook for big energy users

Covid-19 continues to give rise to uncertainty and financial volatility across the globe. And while there is a potential end in sight, there is still a long road to normality ahead.

Fortunately, the UK has set out a sustainable recovery plan focused on fighting climate change and revolutionising the energy sector. This green wave will bring with it a range of challenges and opportunities for big energy users across the private and public sectors.

Looking forward

With COP26 around the corner and a 2050 net zero target to consider, the UK’s decarbonisation efforts have increased significantly. The past year has seen announcements like plans for the issue of the UK’s first green bond, a 2030 ban on petrol cars, and mandatory TCFD recommendations for large businesses. These green initiatives culminated in the highly anticipated new energy white paper which maps out a clean energy transformation. Fuelled by the evolution of technology like AI and IoT, the energy landscape is predicted to be more flexible and transparent than ever before.

However, whilst it’s fairly clear what is on the horizon for the energy sector, there is less certainty around the energy market. Will energy prices continue to recover as demand rises post-Covid? Will the increased reliance on renewables make energy prices more volatile? How will Brexit impact the energy market if at all? And how can big energy users find opportunities in the current uncertainty?

EIC’s ‘2021 outlook for big energy users’ report

Our report outlines the upcoming trends for big energy users and how EIC’s team of energy specialists can help businesses stay ahead of the curve.

2021 energy outlook for big energy users

Download our ‘2021 energy outlook for big energy users’ report


How EIC can help

The UK’s decarbonisation mission will rely upon a changing energy mix, more flexible energy grids, innovative tech, and widespread improvement of energy efficiency. At EIC we like to offer next generation solutions that help our clients prepare for a green future.

Our sister company t-mac delivers compelling metering, monitoring and BMS controls solutions via our in-house team. This is just one of many innovative services that can revolutionise the way you run your business. Allowing you to manage and control all elements of your energy bill on both sides of the meter.

EIC’s services can transform your wider energy strategy to encompass efficiency and self-sufficiency. We can also guide you through compliance with complex carbon legislation, making sure you are working towards ambitious net zero targets.

To learn more about optimising your sustainability strategy contact us at EIC today.