Controlling your energy bills: A guide to non-commodity costs

The cost of electricity has fluctuated considerably in the last few years, for many reasons. During the multiple national lockdowns, prices started to rise considerably and have since reached all-time highs. And due to unforeseen events around the world following Covid-19, the markets have remained incredibly volatile. One of the reasons for this is a rise in non-commodity, or ‘third-party’, costs.

The term ‘non-commodity’ costs has worked itself into many conversations throughout the past few years, within the energy industry. But understanding what non-commodity costs are, and how they could impact you and your business can be difficult to understand.

So, we have broken it down for you. Here is our guide to the different types of non-commodity costs.

What are non-commodity costs?

Essentially, the amount we pay for energy includes three different expenses. The first, is the wholesale price of the actual amount of power we use (the commodity). Secondly, we have the cost of transmission and distribution across the network. And finally, a variety of government levy and taxes. The energy companies pay these fees, and pass the cost onto their customers.

In 2011, non-commodity costs accounted for around 36% of energy prices. In 2022 this has already risen to around 70% and is predicted to reach 80% over the next decade and continue to ascend.

Transmission and distribution costs

Each supplier incurs expenses to run and maintain the power network. These vary from provider to provider, and largely depend on the type of power plant. For example, solar and wind generators are less consistent in output, as compared with gas or nuclear power. With a move towards renewable energy, the cost of balancing the system is likely to increase. The main expenses are:

Government levy and taxes

These taxes fund various government initiatives and green energy programs.

Controlling your expenses

With the increases in non-commodity costs set to continue, it is important to keep an eye on your bills. Proper monitoring, and tracking monthly changes, will ensure you aren’t overpaying.

With such turbulence in the market, there is less control over the wholesale cost of electricity. What can be controlled, however, is how we use energy. At EIC, we can help you plan your usage around annual Triad periods. This can make a significant difference to your energy bills. Our daily traffic light warnings will help you avoid any unnecessary fluctuations, and keep costs low.

Whether you prefer the stability of a fixed price, or the control of a flexible contract, we can help. Setting up an energy contract can be a long process, especially if you want a good price. We have the experience to negotiate with your provider, to make sure you are not paying more than you should be.

Our service is tailored to your needs. To find out what we can do for your business, get in touch today.

The importance of access to energy data

The energy grid is evolving, and systems will have to adapt as we move towards a more flexible energy landscape. Data-driven energy optimisation could be the key to business profitability, as well as deep carbon reductions.

Climate change and net zero targets are at the forefront of the minds of consumers and investors. What this effectively means, is that energy performance is now an operational and commercial priority in building intelligence. Data analytics are crucial for businesses wishing to advance this intelligence.

Let’s take a look at the benefits you can reap from taking control of your data.

Become more efficient

Accessing and understanding data across multiple sites can bring a whole host of benefits. One of the most beneficial advantages is the opportunity to run your business more efficiently.

Efficient energy management can happen anywhere at any time. Energy data and analytics need to be readily available for businesses to obtain the full advantages. Through targeting the data of your sites, you can see where you are using the most energy, when, and for what reason. This makes it easier to identify and remedy areas of waste – making your business more sustainable and future-proofed as a result.

Cut costs

Having quick and easy access to your data is essential for every company. One by-product of becoming more efficient, is the reduction of unnecessary costs. Reducing energy waste in your business automatically reduces any costs attributed to that waste. This frees up money, which can be reinvested in other areas of the business.

Effective data management will help to inform your business decisions, keep your energy costs low and help you to future-proof your sites. Understanding data – not only from your online systems, but also from your bills, for example – can help your business to avoid charges for consumption in peak demand periods, as well as identifying waste usage. Thousands of pounds can be saved through analysing data, as it can identify spikes in wasted energy usage.

Increased transparency

As we move towards a new era of sustainability in business, it is essential for organisations to be as transparent as possible with their clients and potential investors. Transparency about your sustainability efforts can help your business to connect to customers on a deeper level. Offering accountability has been proven to encourage people to opt for certain businesses over their more reserved competitors.

Research has found that 94% of consumers are more likely to be loyal to a brand that is completely transparent. With a consumer market that is focused on sustainability now more than ever, transparency in terms of sustainable goals is key.

Where does EIC come in?

Reducing your energy consumption is a simple and effective solution to reducing costs – if you know how. Finding simple ways around constantly rising prices can often be confusing and time-consuming. But it doesn’t have to be.

At EIC, our goal is to help companies navigate the best routes for themselves and their business plan. We recognise that while there is a broad range of reasons as to why energy prices are rising, we can help our clients return their business strategies to normal.

Get in touch today to find out more. Also, head over to our piece on the changes to the TCR mandates to find out more on how this will affect you.

A decade of successful Triad calls for EIC

A decade of successful Triad calls for EIC

National Grid have published the three Triad dates for the 2021/22 season, which are listed in the table below. For a tenth consecutive year EIC has successfully called an alert on each of these days.

There was a reduction in the number of Triad calls this year with EIC only issuing 17 alerts in total, nearly a third less than the number called the previous winter. This compares favourably with other suppliers who called an average of 25 alerts across the Triad period.

Confirmed Triad DateHalf hour endingSettlement PeriodDemand (MW)
02/12/202117:00SP3443,748
05/01/202217:30SP3542,760
20/01/202217:30SP3543,538

Source: National Grid

Note: Settlement data published on 29/03/22

What are Triads?

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.

Mild winter leads to fall in demand

The Triad season started with a long period of mild weather before a cold spell at the end of November and start of December which resulted in the first Triad. Temperatures returned above seasonal normal for most of December with a particularly mild period between Christmas and New Year. The remaining two Triads occurred in January as temperatures frequently dropped below seasonal normal. In contrast, February contained long periods of mild and windy weather which resulted in a drop in peak demand. Across the Triad season 14 weekdays had an average temperature below 3°C, with 10 of these occurring in January. This compares to 24 the previous winter and only six for the 2019/20 winter.

This winter saw peak demand fall by 1.7GW from last year mainly due to the milder temperatures. There was an increase in demand-side response and a decrease in domestic consumption compared to last winter as there were less severe lockdown restrictions. Average demand also decreased and has now fallen by 9.5GW or 19% in the past 10 years. This has coincided with a 30GW decrease in baseload capacity over the same period as a number of coal, gas and nuclear power stations have closed.

It will be interesting to see whether demand continues to fall next year as baseload capacity is projected to decline further. Three coal and one nuclear power stations are set to close by next winter resulting in the loss of 4.7GW capacity. This will be partially offset by the opening of the 893MW Keady 2 gas power station and the 1GW ElecLink interconnector. However, if margins are tight on cold, still days then this will be reflected by a spike in day-ahead prices. With gas and power prices already at record levels there will be pressure on all sectors to reduce demand in the coming months to lessen the impact of energy bill rises.

Triads granted extra year

In May 2021, Ofgem launched a consultation on the Transmission Demand Residual (TDR) part of the Targeted Charging Review (TCR). The minded-to decision was to delay the implementation until April 2023 which means that there is one final chance for consumers to benefit from Triad avoidance over the 2022/23 winter period. The changes to DUoS charges will still be implemented in April 2022.

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, sites currently taking Triad avoidance action are likely to face an increase in TNUoS costs from April 2023 as the effect of Triad avoidance is removed. Likewise, sites that have a capacity level set too high are also susceptible to DUoS and TNUoS cost increases as they are potentially placed in a higher charging band.

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.

Get in touch today to find out more on how EIC can help you future-proof your business.

In conversation with…John Palmer

You’ve been at EIC for eight years. You must have seen quite a lot of changes in the industry and the company as well?

My role has actually changed quite a bit during those eight years. I started out as a risk management consultant and I was responsible for the trading strategy for all of our clients. I’d support the client-facing teams with meetings. I’d go out and explain what’s happening in the markets and what we were doing with the trading, and make changes to risk management policies.

Then I took over as the manager of the flexible procurement team. I’ve got a team of six flexible account managers and it’s a really good team to manage; they’re really good people. They know what they’re doing and I’m there to support and help out when they need it.

Quite often with customers it’s sitting and working with them to understand what they are looking to get from their flexible energy contract – do they want budget certainty, do they want a market reflective price? So it’s working out what the right strategy is for them.

What do you think has been the impact of the Covid pandemic on the energy sector?

There’s been quite a few changes as a result. The biggest thing in the pandemic was the way that consumption changed, particularly early on with businesses closing down or reducing what they were doing significantly. Because we were pro-active with EIC customers, none of our flex customers were penalised for going outside of their forecast consumptions – as we were able to mitigate that.

For a lot of organisations, people aren’t returning to the office full time. Some businesses are moving entirely to remote working. So that will be a change in the way we use energy. Last winter was a good example. With more people working at home, it changed the profile of energy use over the winter.

“This year we’ve seen the bounce in energy prices, from long-term lows to record highs. This will drive people to look at how efficient they are being with their energy, and how flexible they can be with their demand”

This year we’ve seen the bounce in energy prices, from long-term lows to record highs. This will drive people to look at how efficient they are being with their energy, and how flexible they can be with their demand. There are various schemes to try to make demand flexibility pay off for customers, as well as the opportunity to avoid certain non-commodity charges.

There’s a change in the way we generate our energy in the UK, with the move away from coal generation and closures of some of the nuclear plants. Also the move towards more renewable generation, which typically is wind, wave and solar (which there’s an intermittency to) – could mean our system margins are going to be much tighter in the coming years.

Recently we saw really tight system margins, which meant that day ahead prices went up to over £500 a megawatt hour for electricity. That’s something which is going to become more of an issue for consumers and suppliers to manage; there will be that change in the volatility of market prices.

“The cheapest kilowatt hour is the one you don’t use.”

Procurement will always be important. Buying energy as efficiently and cheaply as possible is always going to be a key part of the puzzle. I think net zero and carbon reduction will become a much bigger consideration for all energy users. It will be about how you can balance your procurement alongside those wider needs of low or zero carbon energy.

What are your predictions for the energy markets over the next year?

That’s a loaded question! At the moment the big thing is obviously wholesale prices and what they might do. I think we are going to be very much driven by weather over the winter, and how much gas becomes available.

I think with Nord Stream 2 coming online, and sending gas from Russia, that might well bring prices down. Certainly if we have a mild winter, prices could come down. But if we have a horrible winter and a shortage of gas, then it will be a case of, when will this stop? Prices can’t stay where they are forever, I think there’s a point where they’re going to come down. It’s just what the drivers are going to be for that.

More generally, it certainly looks like there’s going to be a tightening of what is considered to be a green energy contract. At the moment, a Rego [Renewable Energy Guarantees of Origin] backed electricity contract may not be linked to your electricity in any way. Accusations of greenwashing suggest that there might be a tightening of those regulations. There will definitely be a push towards green contracts. Hopefully green gas will become more established or an alternative option – perhaps hydrogen in the longer-term – which is being looked at as a cleaner way of doing things.

“If we have a horrible winter and a shortage of gas, then it will be a case of, when will this stop?”

I know that there’s a project in Humberside, Zero Carbon Humber, that is looking at how they can capture carbon from a number of carbon intensive businesses including Drax power station as well as other ways to make a net zero industrial cluster in the area. That will be a really interesting project to follow, to see if other areas try to replicate it.

Generally, customers are going to be looking at how they can reduce their energy consumption or generate their own. The cheapest kilowatt hour is the one you don’t use.

What are the pros and cons of flexible contracts, and who would you recommend them to?

I think the benefits are that instead of buying all of your energy on one day, which you do with a fixed contract, you can buy over time. You can sell back energy. Whilst with a fixed contract, if you sign one now, those are the prices and you’re stuck with them for the duration.

If the way you’re using your energy onsite changes then you can reforecast, so you don’t have to worry so much about volume tolerances. In a fixed price contract everything is set up at the time that you sign the contact, so it’s more rigid.

The benefits of flex are very good, but you need to be a reasonably large energy user to do it. With a consumption of more than 2 gigawatt hours annually. You can look at baskets and, if you’re a much larger customer, stand-alone flex contracts. Baskets allow smaller energy users (who may not be able to get a standalone flex contract) to be grouped together in a basket that allows their consumption to be traded together with other organisations.

Do clients need an in-house manager to handle flexible contracts day-to-day?

Having a point of contact to discuss things with is useful but you can have as much or as little information as you want. If you’re someone who wants to see information regularly and know exactly what’s going on, then flexible is a good way to do it, because you’ll be getting a lot of information. We’ll be actively talking to you about what the market’s doing, how it’s moving and what that means for your position.

“We’ll be actively talking to you about what the market’s doing, how it’s moving and what that means for your position.”

We have customers who are really used to the energy markets and energy contracts, but we’ve also got some clients who’ve never done flex before. We can do as much or as little as you want. We can deal with all the trading and we can agree a strategy and walk you through how that works.

We’ve got customers where, initially they wanted to be really involved because we were new to them. It’s then got to a point where they know us, they trust us and they get less involved and leave more to us to do.

If you were in your clients’ shoes, what would you be thinking about when considering an energy purchase?

I would definitely go for a flexible contract, if I was big enough for one. If I was signing a fixed contract, I would sign a shorter contract at the moment and be ready to sign another one if the markets went against me. I’d take a short term position.

“Since 2014, we’ve saved £79 million for clients on flex contracts. Ben Sherbrooke and John Dawson have done a fantastic job.”

For a flex contract, I’d be looking to get things set up and look for a strategy that protected me against the market rising but also gives me flexibility to make some savings if prices fall.

What do you think is the biggest misconception or myth in energy?

The myth that’s been exploded this year is that prices always come down in the summer. That’s been a general assumption, and this year has certainly changed that.

From the flexible procurement team’s point of view, we’ve got a really experienced team. We deal with a whole range of queries – new connections, disconnections, changes of tenancy, site additions and volume queries. The team are very focussed on looking after customers and making sure they have a good experience. That is something that I think we do very well. The customer hopefully knows they can come to us with a query or a problem and we’ll work hard to try and solve that problem for them.

In terms of sustainability, what do you think clients should be focusing on?

The first thing any business should be looking at is reducing the amount of energy they use. That is going to deliver the biggest savings. Projects to replace old lighting or upgrade out-of-date equipment will bring savings on energy contracts.

For companies with the opportunity, onsite generation is something to look at. Solar is becoming more financially viable for a lot of clients and payback times are less now than they were three or four years ago. Alongside solar I suggest battery storage too.

If someone is installing solar I would definitely say consider battery storage alongside it. If your solar is generating electricity during the middle of the day, store that and use it during peak times – because that will help you avoid some of these potential price fluctuations and some of the non-commodity costs that are charged based on when you use your energy. From a green point of view, obviously looking at opportunities to buy green electricity and gas – although green gas is incredibly expensive at the moment. So potentially for some customers, carbon offsetting might be an alternative. And that’s something we can do.

What are your hobbies?

Cycling is definitely one of my main, spare time activities. I’ve got a summer bike and a winter bike. I don’t want the summer bike to get messed up in the winter! I’ve got a carbon fibre summer bike, a Canyon, and a more sturdy winter one with mud guards. I’m a member of a cycling club called ‘Chapter 2’, although we haven’t been out since the pandemic.

What was the one thing you missed during the lockdown?

Cycling with other people was one of the things I missed most. To be honest seeing friends and family, particularly as my best friend lives round the corner from me. It was a shame that we could see each other’s houses, but we couldn’t see each other. I sort of saw my mum, from a few metres away to help with shopping and was able to do more for her during the later lockdowns. I didn’t see my sister for a good six or seven months. I only saw her on video chat because she lives down in Kent. It took a long time to see her – we are very close and we get on very well.

60 seconds with John Palmer

What do you think has been the impact of the Covid pandemic on the energy sector?

There’s been quite a few changes as a result. The biggest thing in the pandemic was the way that consumption changed, particularly early on with businesses closing down or reducing what they were doing significantly. One of the big things we had to do was to react to that and reach out to customers, to reforecast their consumptions.

Because we were pro-active with EIC customers, none of our flex customers were penalised for going outside of their forecast consumptions – as we were able to mitigate that.

“This year we’ve seen the bounce in energy prices, from long-term lows to record highs. This will drive people to look at how efficient they are being with their energy, and how flexible they can be with their demand”

We are going to see a lasting shift in the way people work so, for a lot of organisations, people aren’t returning to the office full time. Some businesses are moving entirely to remote working. So that will be a change in the way we use energy.

This year we’ve seen the bounce in energy prices, from long-term lows to record highs. This will drive people to look at how efficient they are being with their energy and how flexible they can be with their demand.

Generally, customers are going to be looking at how they can reduce their energy consumption or generate their own. The cheapest kilowatt hour is the one you don’t use.

“The cheapest kilowatt hour is the one you don’t use.”

If you can generate your own energy onsite, you will be avoiding a lot of the non-commodity charges.

What are your predictions for the energy markets over the next year?

That’s a loaded question! At the moment the big thing is obviously wholesale prices and what they might do. I think we are going to be very much driven by weather over the winter, and how much gas becomes available. I think with Nord Stream 2 coming online, and sending gas from Russia, that might well bring prices down. Certainly if we have a mild winter, prices could come down.

More generally, it certainly looks like there’s going to be a tightening of what is considered to be a green energy contract. At the moment, a Rego [Renewable Energy Guarantees of Origin] backed electricity contract may not be linked to your electricity in any way. Accusations of greenwashing suggest that there might be a tightening of those regulations. There will definitely be a push towards green contracts. Hopefully green gas will become more established or an alternative option – perhaps hydrogen in the longer-term – which is being looked at as a cleaner way of doing things.

If you were in your clients’ shoes, what would you be thinking about when considering an energy purchase?

I would definitely go for a flexible contract, if I was big enough for one. If I was signing a fixed contract, I would sign a shorter contract at the moment and be ready to sign another one if the markets went against me. I’d take a short term position.

For a flex contract, I’d be looking to get things set up and look for a strategy that protected me against the market rising but also gives me flexibility to make some savings if prices fall.

From a flexible procurement point of view, our trading team is really good. They get really good results for clients. Since 2014, we’ve saved £79m for clients on flex contracts. Ben Sherbrooke and John Dawson have done a fantastic job.

“Since 2014, we’ve saved £79m for clients on flex contracts. Ben Sherbrooke and John Dawson have done a fantastic job.”

What do you think is the biggest misconception or myth in energy?

The myth that’s been exploded this year is that prices always come down in the summer. That’s been a general assumption, and this year has certainly changed that.

In terms of sustainability, what do you think clients should be focusing on?

The first thing any business should be looking at is reducing the amount of energy they use. That is going to deliver the biggest savings. Projects to replace old lighting or upgrade out-of-date equipment will bring savings on energy contracts.

For companies with the opportunity, onsite generation is something to look at. Solar is becoming more financially viable for a lot of clients and payback times are less now than they were three or four years ago. Alongside solar I suggest battery storage too.

What was the one thing you missed during the lockdown?

Cycling with other people was one of the things I missed most. I’m a member of a cycling club called ‘Chapter 2’, although we haven’t been out since the pandemic.

You can read our full interview with John Palmer here.

Lighting solutions for dark winter nights

The past year has seen the world experience incredibly detrimental weather abnormalities. And the UK’s energy supplies have also been put under considerable strain. So now that we are in the midst of darker nights, businesses are left wondering how this will affect them.

The installation of LED lighting in business premises throughout the country has shown encouraging results. But if the UK wants to continue to progress as a sustainability leader, more businesses must follow suit.

20% of electricity generated in the UK can be attributed to lighting. As we approach COP26 and net zero targets, it is essential that we cut carbon emissions wherever possible and fully embrace sustainability. And to do this, we must incorporate innovative systems such as LED lighting.

We take a look at some of the benefits of making the switch to LED lighting for the darker winter months, and beyond.

Reduce emissions

Lighting accounts for around 5% of global CO₂ emissions. If businesses across the world made the switch to LED technology, they could save a whopping 1,400 million tonnes of CO₂. And while there are many benefits to implementing green practices, the reduction of emissions and the corresponding impact on the environment are surely at the top of the list.

Before a business can understand how best to incorporate LED lighting, it must first survey its sites and practices. Once these areas of high emissions have been pinpointed, you can then focus on reducing them.

Making the switch to LED lighting can hugely reduce a business’s carbon footprint. LED lights use 90% less energy than a typical incandescent bulb. And traditional lighting loses almost 95% of its energy, through heat production alone.

Benefitting budgets

LED lighting is the most cost-effective and durable option, for both businesses and households around the world. Making the switch to a different lighting system for buildings, possibly on multiple sites, can seem daunting. But the eventual return on investment will not only be beneficial in terms of time and money, but also environmentally.

These bulbs require far less electricity power and have a much longer lifespan. Sometimes even lasting an impressive 20 years. Aside from the environmental benefits, this will also save money for businesses, as they purchase less bulbs.

Boost corporate social responsibility credentials

Becoming energy efficient will also boost your corporate social responsibility (CSR) credentials. By improving green credentials, businesses can attract new potential clients while cutting utility costs and carbon emissions. Transparency is now essential for businesses, as customers around the world place increasing value on the environmental.

By demonstrating broader interests, rather than simply focusing on generating revenue, businesses can attract a loyal customer base. Prioritising the environment and customer wellbeing can also prompt word-of-mouth referrals and entice a broader range of clients.

How can EIC help?

It is within the best interests of every business to find simple solutions, that are both efficient and effective. The energy efficiency and long lifespan of LED lighting holds the potential to revolutionise the lighting industry. Boosting efficiency across the UK, and the world.

At EIC, we provide audits and a number of services that help businesses to decide upon the most effective and efficient solution for them. Our lighting solutions have helped businesses to upgrade their systems and reduce their carbon footprints.

Get in touch today to find out how EIC can help you to integrate effective and efficient lighting solutions into your business.

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

Creating science-based targets is essential for businesses of every size as we progress towards net zero targets. To create these targets, a business must first understand its consumption. At EIC we offer a range of comprehensive services that can help you help your business.

We are already partnering with leading UK private and public sector organisations – supporting them to transform their operations in line with ambitious targets. This will help them future-proof their business and 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 1.5°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.

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

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.

12 tips for saving energy this Christmas season

As the holiday season approaches, many will be looking forward to a little indulgence after the tumultuous year we’ve had. While embracing excess is a traditional Christmas pastime, it is often followed by having to save money. We’ve put together a list of our best energy saving tips for businesses so that you can enter the new year on a high both spiritually and financially.

Switch to LED lights

LED lighting remains one of the best energy-saving technologies for businesses but even more so during the Christmas period. Estimates show that 1/5 of all UK energy is on lighting. Combined with supporting technology, like movement sensors and timers, you could reduce your lighting bill by over 80%.

Check your heating system

Heating systems, especially boilers, are often a part of a building’s infrastructure before a business moves in. This means that data on their age and running efficiency could be a black hole until they are actively investigated. Check your boiler this winter to see if it requires maintenance or an upgrade to ensure every unit of energy used for heating is done so effectively.

Drop passive energy consumption

Vampire energy use refers to devices and appliances that draw power even when they are not in use. Get a checklist in place as soon as possible. Delegate responsibility for each employee to switch off their devices before they leave. Also, you might use a power strip or two to simplify this process in areas where a lot of devices are in use at once.

Self-reliant buildings

Building management systems (BMS) have seen a bumper of a year thanks to the pandemic and recent lockdown measures. The ability to remotely manage and monitor your utility usage has never been more valuable. Scheduling programs for light, heat and air flow can be integrated into such a system to help support your energy efficiency.

Aside from energy usage, the right BMS can also protect other utilities from the ravages of winter – frozen pipes included.

Intelligent metering

Alongside BMS, a robust metering set-up can provide a more comprehensive view of your utility usage to better inform policy. Using sub-meters in different areas of a site can also give insight into sources of waste or inefficiency. These can then be addressed before they exact a financial toll during the colder months.

Use curtains wisely

As strange as it might sound, curtains can actually provide huge benefits to a business. While open they allow for natural light to fill the office space, so you can dial back on electricity use. Granted daylight is at a minimum at this time of year, but when it gets dark outside, the curtains provide insulation and help retain residual heat.

Draft-proofing doors and windows during the holidays is also a great way to improve heat efficiency on your real estate. Given that SMEs are estimated to overspend on gas heating by as much as 30%, any improvement seems worthwhile. Also, doing this during the Christmas break will minimise disruption for employees.

Saving energy with LED lighting

Building performance

The introduction of widespread EPC use, and its requirement when leasing new buildings, means there is increased pressure to build and maintain better than we have been. However, there’s plenty of reason to go above and beyond EPC guidelines. Improving your insulation, installing double-glazing, or even just draft proofing your premises can yield significant savings on your energy bills.

Onsite generation

EIC has been shouting from the rooftops about onsite generation for years. Could your own rooftops be suitable for solar panels? If so, you could enjoy reduced energy bills and even a passive income stream. As we step closer to net zero 2050, you will be improving your carbon profile as well.

Conduct an energy audit

Like a smart meter, an energy audit will give you a clearer picture of energy usage in your business. Identifying the points of weakness, such as outdated equipment or inefficient behaviour, means you can develop individual solutions that will improve efficiency system-wide.

Make use of gadgets

Tablets use up to 70% less energy than laptops. If you have or are considering a ‘Bring Your Own Device’ policy, now is an excellent time to action it. You might also consider providing these devices to staff given how much energy it could save you.

Rethink your kitchen etiquette

As the temperature drops, making hot drinks and food become more tantalising, your staff kitchen will be working overtime. Domestic kettles are one of the biggest energy drains in homes and the same is true in office kitchens. Put up posters encouraging your staff to be more environmentally conscious. Such as only boiling enough water for the drink they make or filling a flask in the morning that can last the whole day.

Hibernate

The holiday season and continuing Covid restrictions will leave a lot of offices empty. During this time consider putting together a shutdown list. This will ensure non-critical systems aren’t left running and draining power.

At EIC, we have supported businesses in improving their energy efficiency since 1975. We currently manage around 12-TWh of energy for clients each year and provide services to support many of the strategies we’ve outlined here.

We can help you to integrate Smart Metering, Building Management Systems and Onsite Generation into your business. To find out how get in touch.

Challenging Winter Ahead for Triad Season

Winter is fast approaching and the Triad season will soon begin. This is an important time for many large UK consumers as they seek to lower transmission costs by reducing demand during potential Triad periods. Triads are three half-hour periods with the highest electricity demand between the start of November and the end of February and 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 your electricity contract allows it then reducing your demand at these specific points will result in lower transmission charges. However, knowing when Triads occur is a complex business so, to help our clients, EIC provides a Triad Alert service. We have successfully forecast each of the three Triad periods for the last 8 years, saving customers millions of pounds in transmission charges.

Pandemic continues to suppress demand

Winter peak demand is at its lowest point since 1992/93 and is now 14 GW (~24%) lower than the peak of 2010/11. There are a number of factors that have contributed to the fall in peak demand over the past decade. These include improvements to the energy efficiency of appliances, an increase in LED lighting and a rise in embedded generation.

However, in 2020 we can add another significant contributor to demand reduction. The coronavirus pandemic has led to a dramatic fall in peak demand since mid-March. Demand has increased since lockdown ended but is still lower than previous years.

National Grid are currently forecasting peak demand over the Triad period to be around 43-44 GW, slightly lower than last winter’s peak of 45 GW. The winter demand forecast looks to be flatter than previous years, making predicting when Triads will fall far more challenging. It is therefore important to receive Triad alerts from a trusted and reliable source such as EIC.

EIC’s record of Triad season success

EIC has an in-house model which has successfully forecast every triad period for the last eight years. We issue clients with comprehensive alerts advising them when a Triad is forecast, so they can reduce consumption accordingly.

Our Triad Alert Service forecasts the likelihood of any particular day being a Triad and sends alerts before 10am. Businesses can then take action to avoid high usage during these periods, while minimising disruption to everyday activity. We also monitor the market throughout the day and send out an afternoon alert in the event of significant change. The daily report can also help you plan ahead with an overview of the next 14 days alongside a long-term winter outlook.

Calling daily alerts would generate a 100% success rate, however this could have a negative impact on our clients. Organisations would incur major damage to revenues if required to turn down their production each day for 4 months ‘just in case’ and at EIC our aim is to provide as few alerts as possible. Over the 2019/20 Triad period we called just 13 alerts while the average supplier issued over 20.

Triads granted extra year

In December 2019, Ofgem published their final decision on the Targeted Charging Review (TCR). The main outcome of this decision is that, from April 2021, the residual part of transmission charges will be levied in the form of fixed charges for all households and businesses. However, as a result of the coronavirus pandemic Ofgem has decided to delay this by a year. This provides an extra opportunity for consumers to benefit from Triad avoidance before TCR changes arrive in April 2022.

With the TCR, Ofgem aims to introduce a charge it considers fair to all consumers, not just those able to reduce 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.

How we can help with Triad season

We have helped hundreds of clients avoid these transmission costs by providing them with the tools needed, giving EIC an enviable track record in Triad prediction.

Last year, our customers cut demand by an average of 41% compared to standard winter peak-period half-hour consumption – resulting in significant cost savings. Clients who responded to our Triad Alerts, saved on average £180,000. Our best result last winter saw a client saving nearly £1 million in TNUoS charges.

The Triad season starts on 1 November. Find out more about our Triad Alert service.

Explaining TM44 Inspections: The what, who, when and why

EIC explores the purpose of TM44 inspections, why your organisation might need one and how EIC can help you get one.

 

What is TM44?

TM44 is the accepted guidance for the UK for judging the efficiency of air-conditioning units. The key role of the guidance is to support inspections to comply with the Energy Performance of Buildings Directive (EPBD). However, they can provide assistance to any building owner or manager desiring further data on the efficiency of their air-conditioning system. The EPBD1 was initiated in 2003 and replaced a decade later by a recast Directive2.

The legislation required that European members devise ‘measures to establish a regular inspection of air-conditioning systems of an effective rated output of more than 12 kW’.

 

Who needs a TM44?

Not all air-conditioning systems are equal; TM44 focuses on those that use refrigerants for cooling, and parts of other cooling methods such as cooled decks/ceiling slabs or those using aquifers for cooling.

The 12kW figure is a good rule of thumb, making any building owner or manager with a system of that scale subject to TM44. It is important to note that this applies to single large-scale units with an output of 12kW and to individual units that together reach or exceed 12kW.

When is a TM44 necessary?

Inspections timings are relevant here since each mandatory inspection must take place within five years of the previous one. According to TM44 guidance, the initial inspection must satisfy the following criteria:

  • Any system that began service on or after 1st January 2008, must have undergone an initial inspection within five years of the date service began.
  • Systems whose output exceeds 250kW must have undergone inspection no later than 4th January 2009.
  • Systems with a service start date prior to 1st January 2008 and whose output exceeds 12kW must have received inspection by 4th January 2011.

From 6 April 2012, all TM44 air-conditioning inspection reports have been required to be lodged on the Ministry of Housing, Communities & Local Government Energy Performance of Buildings Register where a report and certificate are generated. Accredited assessors and members of the public may access this site to view and download their TM44 certificates and reports.

 

Why is TM44 important?

There are several benefits to having a TM44 inspection. Firstly, a company can avoid penalties for non-compliance. These penalties are costly, inviting a £300 fine per offence – meaning either a non-complying building or multiple units inside a single structure whose combined output is more than 12kW, and if an organisation fails to supply a copy of their inspection report within seven days of request by an enforcement authority, they can incur an additional fixed penalty of £200 per building or unit. Enforcement Officers can check at any time whether a building or unit is compliant.

TM44 is an excellent data gathering opportunity about a major source of utility costs, offering insight on how to:

  • Improve efficiency
  • Reduce electricity consumption
  • Decrease operating costs
  • Diminish carbon emissions
  • Reduce maintenance needs
  • Improve controls and settings
  • Identify technical flaws

The report will also highlight opportunities such as:

  • Improvement to operation
  • Improvements to replace less efficient systems
  • Replacement of oversized systems (scale of the system relative to cooling load)

When viewed with these gains in mind, TM44 can be thought of a necessary process that yields significant benefits down the line.

 

Securing your TM44 with EIC

The EIC team were among the first to receive UK accreditation for the delivery of airconditioning inspections and actively follow any legislative changes so they can keep businesses ahead of the game.

The team can also provide Wrap Reports as standard, offering an overview of essential report findings including reference pictures, additional relevant data and a complete asset list of equipment found.

Alongside this extensive experience, clients will receive additional complimentary intelligence in other areas of sustainable improvement. EIC’s expertise in other fields like Energy Contract Procurement and Intelligent Building Management will position organisations to undertake other sustainable development projects seamlessly, with guidance and security.

For a full breakdown of EIC’s compliance services, and how your organisation can acquire TM44 Certification, get in touch with the EIC team here.

 

1(2002/91/EC)

2(2010/31/EU)

3(Statutory instrument 2012 N0 3118)

 

 

Should SMEs conduct an energy audit?

EIC explores the benefits that firms can reap from conducting an energy audit and how to maximise the value of its findings.

Information is power

Energy audits provide firms with a clearer picture of their energy consumption patterns. Also, they can highlight existing points of weakness where wastage may be occurring as well as provide a foundation of knowledge for negotiating new energy procurement contracts.

As we approach the 2050 net-zero deadline, clarity surrounding energy usage – the major driver behind office-based carbon emissions – will become increasingly valuable.

Small to medium enterprises in particular stand to benefit greatly from the help audits can provide. Especially in navigating information barriers that conceal opportunities to improve their energy efficiency.

While a review of an organisations energy portfolio can seem daunting, technology can help lighten the load. Smart meters can keep an ongoing, up-to-date record of energy usage across an entire site.

Employing one of these devices essentially automates the local data-finding necessary to perform an effective audit. Given how vulnerable long-term metering is to human error, this makes their installation a wise first step in the process.

Metering alone can provide average energy savings of 10% and comprehensive sub-metering can raise these savings by a further 30% according to the Carbon Trust.

An on-site walk around compliments the auditing process since it can identify sources of inefficiency missed by meter readings. Old equipment in need of replacement is one common example. Another being wholesale temperature regulation of buildings since this often does not reflect actual occupancy levels in individual rooms.

The fruits of an energy audit

mixed fruitWith the audit complete, realistic energy efficiency targets become foreseeable and have a baseline for comparison of progress. Such a foundation is crucial for effective engagement with carbon compliance schemes like SECR and CCA.

Firms might follow up by installing site-wide building management systems that can provide further clarity on utility consumption.

Such a system can remotely govern space occupancy, dynamic temperature regulation and air quality from a single platform. The latter of these also affects the health and productivity of those within. Thus, intelligent air quality management can represent a twofold investment.

EIC understands the potential of informed utility management, hence why it provides all these services under a single banner.

Whether it be by supporting data collation with expert metering guidance or exploiting the discoveries that an audit yields with a single-platform building management system, EIC can provide the technical expertise needed for enterprises to maximise the benefit of an energy audit.