Budget Archives

LED lighting: Reducing costs and carbon at the same time

Posted on 21st February 202315th May 2023 by Josh Ellison

The past decade in carbon savings has been awash with success stories surrounding the installation of LED lighting systems. EIC has summarised a few public sector examples below and guidance on how your properties could benefit from a lighting upgrade.

Success in the NHS

A UK NHS trust made facility management news back in 2020, as it implemented a comprehensive upgrade to its lighting systems. Undertaking a site-wide LED installation meant that the trust enjoyed savings in excess of £180,000 annually.

The gains of the forward-thinking trust are not only measured in pounds and pence; the switch to highly efficient LED lighting, whose lifespan is more than quadruple that of its fluorescent counterparts, also means reduced maintenance as well as a significantly diminished carbon footprint.

Capital gives green light for LEDs

In 2020, the city of London underwent a large-scale retrofit of over 8,000 traffic signals, regulatory box signs and push buttons. Upgrading these sites to LED lighting is expected to deliver energy and cost savings of 75% for Transport for London.

“It’s making our infrastructure greener, more sustainable and cheaper to run and not only that but as LEDs are more visible it is making our roads safer…”
– Glynn Barton, TfL’s Director of Network Management

This conversion echoes another 2018 retrofit that saw 25,000 London signals at 900 sites upgraded with similar technology.

Hertfordshire County Council is taking this attitude a step further and has pledged to replace all the street lighting in its seat with LED illumination. The project reached its final stage in 2020 and the council expect it to reduce street lighting CO2 emissions by more than half. In material terms, this equates to 12,000 tonnes of carbon dioxide and £5m saved for the residents of Hertfordshire.

The commercial picture

The benefits of LEDs are not just public sector, businesses can also make significant savings with this technology. Consider that a 20% reduction in energy costs can have the equivalent economic effect of a 5% increase in sales.

The difference with an LED installation is that it is permanent, and not subject to market conditions.

Traditional lighting actually wastes 95% of the energy it uses on the heat it produces. Since it operates at low temperatures, LED lighting reduces this waste by 90%. This also makes LED a much safer option if the lighting is located near human activity.

By effectively removing this heat source, temperature control systems like air conditioning will operate with greater efficiency. As EIC’s TM44 blog demonstrates, this too can equate to significant savings.

The future for LED lighting

The use of fluorescent lighting bulbs is being phased out. As units break, they must be replaced with LED equivalents because the sale and installation of new fluorescent tubes and light fixtures are prohibited beginning in September 2023. This is not only because of hazardous substance of Mercury within fluorescent lighting, but alternating to LEDs also provides many advantages, including:

Strong energy efficiency
Extended service life
Adaptability in terms of light colour
Outstanding photometric qualities

How EIC can help

EIC’s Lighting Solutions, including complimentary lighting control systems, has helped dozens of organisations. These controls include movement sensors, time clocks and light sensors which can all support an LED upgrade in reducing costs and CO2 footprint.

The EIC service includes initial surveys to establish the unique needs of a site, later formulating a bespoke proposal. Once installation is complete, EIC will also provide supplementary training to teams within an enterprise to ensure the new equipment is used as effectively as possible.

A full breakdown of this service is available by contacting the EIC team here.

Energy audits: what are the benefits for SMEs?

Posted on 28th August 20207th September 2022 by Sophie Wyatt

With so many responsibilities to balance, it can be difficult for businesses to keep track of where and when they are using the most energy. But in order to reach a sustainable future, it is essential that businesses get to grips with their levels of consumption and begin to manage their consumption effectively. And with such a volatile energy market, controlling consumption has become even more vital.

Energy audits make this process simple. By collecting your energy data and looking at factors such as lighting, heating and air conditioning, audits can help you to identify areas where you could reduce your energy usage. By uncovering these insights, businesses could receive social, environmental and financial benefits.

As energy prices reach record highs, we know that SMEs are becoming increasingly concerned with the obstacles in front of them. And this is only set to increase over the winter period. Getting ahead of the auditing game will bring benefits and help to ease the burden that these companies currently face.

Here are some of the ways energy audits could benefit your business in the long run.

Lower consumption

Not only do energy audits save on costs by identifying where energy is being wasted, they also help businesses to make the move towards a greener future. Without the information obtained through an audit, businesses could be consuming more energy than they need to, wasting money and pushing up their emissions.

Businesses are also facing pressure from stakeholders and government to become greener, as environmentalism takes centre stage in policy making and finance. Energy efficiency is one of the most practical ways to reduce your environmental footprint, and benefits your business – in both the long-term and short-term.

Reduce energy costs

Once you start reducing wasteful energy consumption, you will begin to reap financial rewards. Energy expenses often go unnoticed due to old appliances, inefficient technology or poor insulation. But becoming energy efficient could be as easy as switching to energy-saving light bulbs, or upgrading your air conditioning.

With smart metering you can look at your consumption, create budgets and set targets. Consider installing a building management system, which will enable you to see and control your energy use in real-time. Being proactive with your energy management can save you time and money further down the line.

Longer equipment lifespan

Upgrading to energy efficient equipment will mean that your sites perform better, and equipment will last longer. This is because your appliances won’t need to work as hard to provide the same level of performance.

Keeping equipment up-to-date will streamline your operations, leading to more efficient ways of working. This will enhance the overall productivity of your facilities, which will lead to profitability.

Complying with regulations

Once you have analysed the results of your energy audit, you can set realistic energy efficiency targets and establish a baseline to track your progress. It is essential that you put a strong foundation in place, on the basis of clear audit data, so you can effectively engage with compliance schemes.

Understanding your energy consumption, and associated carbon footprint, isn’t just about boosting your green reputation. Energy and carbon reporting schemes such as Streamlined Energy and Carbon Reporting (SECR) and the Energy Savings Opportunity Scheme (ESOS) are now mandatory for large companies. To stay compliant with these schemes, and prepare for future legislation, businesses should carry out regular energy audits.

At EIC, we understand the importance of keeping up-to-date with compliance. Aside from our auditing services, we offer a full review of your organisation to assess your legal obligations and compliance status. We can provide you with a Compliance Report:

summarising our findings
explaining the legislation, and
outlining your next steps.

Get in touch today to find out more about our trusted compliance services.

Mitigating risk

Mitigating risk is a part of every business strategy, no matter the size or scope. It is crucial for future growth, and provides a level of certainty.

An energy audit provides transparency and assurance, helping businesses to take control of their consumption and costs. And because it can boost compliance and brand reputation, it can also help to secure funding for your business.

Investors are now taking climate-related risks more seriously, and this includes the levels of emissions that your business releases into the atmosphere. The greener and more efficient your business, the more likely you will be to receive financial support from these investors.

How can we help?

We know that a better understanding of your carbon footprint leads to a better reputation, in an increasingly competitive market. Energy and carbon reporting schemes such as SECR and ESOS are mandatory for large companies. But most businesses have to comply with some level of reporting – and it pays to get ahead of the curve.

Carrying out regular audits will help you to comply with these schemes, and prepare for future legislation. Staying transparent and being pro-active is now essential for any business. You will avoid fines for non-compliance, and attract eco-conscious clients to your business.

Whether it be improving monitoring and targeting, introducing compliance regimes or working on smart procurement, EIC can provide the technical expertise needed for enterprises to maximise the benefit of an energy audit.

Get in touch today to find out how EIC can help you incorporate energy audits into your business strategy.

The end of fixed term energy contracts?

Posted on 21st August 20209th November 2020 by Josh Ellison

EIC expands on recent comments from industry professionals concerning the viability of fixed-term energy contracts in an uncertain future.

The floodgates open

The impact of COVID-19 has been felt at all levels of commerce, whether it be the radical transition to remote working or exposing the fragility of the fossil fuel sector.

Many organisations have recognised the opportunity that remote communications technology like Zoom and Skype have presented. Building costs account for a huge portion of the average firms outgoings and by reducing the need for space, these costs can shrink as well.

‘The new normal’ it seems could be a boon for all businesses in terms of operation costs, not to mention time saved for their employees. However, as with any paradigm shift, this transition has a great deal of uncertainty attached to it.

A major challenge facing energy suppliers will be in predicting consumption patterns as more people start to work from home. Unpredictable fluctuation will make it more difficult for suppliers to mitigate risk on fixed term contracts. As a result, they will become greatly exposed to imbalance charges and ‘Take-or-pay’ penalties embedded in most standard fixed contracts.

Fixed vs flexible contracts

As a means to protect against these volatile shifts in the country’s energy demand, energy suppliers will increase the price of fixed energy contracts. Doing so will protect against uncertain consumption patterns. Suppliers may also begin to leverage the terms within those contracts to the cost of the firms they are supplying.

Chris Hurcombe, CEO of Catalyst Commercial Services, believes fixed-price contracts may ultimately disappear as suppliers struggle to predict consumption patterns and attempt to insulate themselves from risk.

“Post-Covid, there are too many unknowns for suppliers to price them accurately, so they are doing everything possible to de-risk contracts. Credit requirements are going up and some suppliers are not pricing for certain industries without an upfront deposit or a significant price premium…”

Chris Hurcombe, CEO of Catalyst Commercial Services

Currently, fixed-price contracts levy a 10% price premium compared to their flexible counterparts. Additionally, Hurcombe has predicted a 15-17% rise in 2021, continuing to 20% the following year.

Non-commodity costs, expected to climb in the near future, now represent the lion’s share of energy bills. As such, they represent the largest risk factor for end-users/client procurement budgets. These ‘fixed’ contracts, which allow suppliers to pass through additional energy charges, may hold a costly surprise for the firms taking part.

Help on the inside

Fortunately, flexible contracts, which EIC specialises in procuring, offer means to reduce or avoid some of these charges. They also afford adaptability in a changing commercial landscape. As volume consumption forecast becomes difficult and budget certainty key for the survival of companies, flexibility will become crucial.

The UK commercial and industrial sectors consume 185TWh annually, approximately £27bn worth, so the potential savings here are gargantuan. Savings of such magnitude can’t be ignored in an economy approaching its deepest recession since 2008’s financial crisis.

EIC can secure you a flexible energy contract to take advantage of these savings. The key markers that EIC looks for when engaging suppliers include contract features and functionality, transparency around price-fixing mechanism and competitiveness of the supplier’s account management fee.

Using these criteria means EIC can effectively guide your market position despite the fluctuations that a post-COVID future promises.

Existing EIC clients were collectively under budget to the tune of £65.7m between 2014 and 2018 for electricity and gas. One pharmaceutical client enjoyed 78% in annual savings over a 36 month period.

Find out more about how to recruit EIC’s expertise into your negotiations.

Budget 2020

Posted on 13th March 2020 by Amy Coniff

The new Chancellor, Rishi Sunak, has delivered the first Budget since the UK set its 2050 Net Zero target last year. The previous Chancellor, Sajid Javid, had promised a “green” Budget, however the current health crisis caused by the spread of COVID-19 had cast doubts on how much time Mr. Sunak would spend on energy and the environment.

Below, we highlight key announcements:

Carbon reduction schemes

The government announced a Carbon Capture and Storage (CCS) Infrastructure Fund to establish CCS in at least two UK sites. One by the mid-2020s and a second by 2030. CCS is a technology that involves the capturing of carbon dioxide emissions created by fossil fuels during energy generation. The CO₂ can then be transported and stored safely. There are currently no operational commercial CCS facilities in the UK to date. However, there are a small number of pilot projects currently in development.

The Chancellor also announced a Green Gas Levy, designed to help fund the use of greener fuels. This is in effort to encourage more environmentally-friendly ways of heating buildings through a new support scheme for biomethane. In addition, the Budget stated that the government will increase the Climate Change Levy (CCL) that businesses pay on gas in 2022/23 and 2023/24 (whilst freezing the rate on electricity). It will also reopen and extend the Climate Change Agreement (CCA) scheme by two years.

Further announcements saw the Renewable Heat Incentive (RHI) scheme extended for two years until March 2022. This is alongside a new allocation of flexible tariff guarantees to non-domestic RHI in March next year. The government said these efforts would “provide investment certainty for the larger and more cost-effective renewable heat projects”.

Electric vehicle infrastructure

Road transport is currently responsible for approximately one fifth of all UK emissions. To reduce this the government has announced investment in electric vehicle charging infrastructure with aims that “drivers are never more than 30 miles from a rapid charging station”. The government will invest £500 million over the next five years to support the rollout of a fast-charging network.

The government is still considering the long-term future of incentives for zero-emission vehicles alongside the 2040 phase-out date consultation. In the meantime, £403 million will be provided for the Plug-in Car Grant, extending it to 2022/23, with a further £129.5 million to extend the scheme to vans, taxis and motorcycles. In addition there will be an exemption of zero emission cars from the Vehicle Excise Duty (VED).

Natural environment

The Budget has announced a Nature for Climate Fund, which will invest £640 million in tree planting and peatland restoration across England, representing the coverage of an area greater than Birmingham over the next five years. Additionally, the announcement of the Nature Recovery Network Fund and the Natural Environment Impact Fund will each provide avenues for environmental restoration and sustainable development.

Future reading

In the build-up to the COP26 Climate Summit, to be hosted in Scotland later in the year, HM Treasury will publish two reviews. One into the economic costs and opportunities associated with reaching Net Zero and the other into the economics of biodiversity.

In summary

Reactions to the Budget have been a mixed bag. It’s been cited as simultaneously the greenest modern Budget to date and a missed opportunity regarding the larger climate picture. The government has announced a number of positive policies that will begin to pave the way for the Net Zero transition. However, the decision to freeze fuel duty for the tenth year in a row and investment of £27 billion into new roads will be regarded as counter-productive to ambitious targets.

Stay informed with EIC insights

Our Market Intelligence team keep a close eye on the energy markets and industry updates. For the timeliest updates you can find us on Twitter and LinkedIn.

Autumn Budget light on energy

Posted on 31st October 201813th October 2020 by Amy Coniff

During the Chancellor’s hour-long speech the overall focus was on tax and spending, with little said about climate change. What energy-related announcements were made?

Climate Change Levy

CCL is a tax on energy delivered to non-domestic users within the UK. Businesses participating in Climate Change Agreements (CCAs) can avoid up to 90% of this levy by investing in agreed energy efficiency and emissions reduction measures.

This latest Budget announced upcoming changes to CCL rates. The Government’s ongoing efforts to rebalance the main rates paid for corporate gas and electricity use will see the two prices brought more in line with each other.

The electricity rate will be lowered in 2020-21 and 2021-22, whilst the gas rate will be increased in 2020-21 and 2021-22 so that it reaches 60% of the electricity main rate by 2021-22. Other fuels, such as coal, will continue to be aligned with the gas rate.

The impact to your energy bills

The increase in revenue for the Treasury will come as a direct result of higher energy bills for businesses. An increase in the CCL for 2019 was already expected as a result of the closure of the Carbon Reduction Commitment (CRC).

Carbon Price

Carbon Price Support (CPS) is applied to the power sector in the UK, with the exclusion of Northern Ireland, and has been a key driver in the reduction of coal usage in the UK fuel mix.

The Government has decided to maintain the UK’s carbon tax at £18 per tonne of CO₂, until April 2021. However, the budget provides plans for the Government to reduce the CPS from 2021-22 if the total carbon price remains elevated.

In addition to this, the Government has published plans for the implementation of a UK carbon tax in the case of a ‘no-deal’ Brexit. Under a ‘no-deal’ scenario, the UK would be excluded from participating in the scheme. This would mean current participants in the EU ETS who are UK operators of installations will no longer take part in the system.

In this instance, the Government will initially meet its existing carbon pricing commitments through the tax system. A carbon price would be applied across the UK, with the inclusion of Northern Ireland, starting at £16 per tonne of CO₂, marginally less than the current EU ETS price, maintaining the level of carbon pricing across the UK economy post-Brexit. The tax would be applied to the industrial installations and power plants currently participating in the EU ETS from 1 April 2019.

A freeze on fuel duty

Already announced ahead of the Budget, the Government has promised that fuel duty will be frozen for the ninth year in a row. This will see the tax on fuel, currently 57.95p per litre of petrol, diesel, biodiesel, and bioethanol, remain fixed over the winter period.

Enhanced Capital Allowances

The Budget also included changes to Enhanced Capital Allowances (ECAs), which are designed to encourage UK businesses to invest in high-performance energy efficiency equipment. The Government plans to end ECAs and First Year Tax Credits for technologies on the Energy Technology List and Water Technology List, from April 2020. The Government believe these ECAs add unnecessary complexity to the tax system and that there are more effective ways to support energy efficiency.

There is no new funding in place yet, but savings will be reinvested in an Industrial Energy Transformation Fund, to support significant energy users to cut their energy bills and help transition UK industry to a low carbon future.

The Government will extend ECAs for companies investing in electric vehicle charge points to 31 March 2023. This is part of the Government’s ambition for the UK to become a world-leader in the ultra-low emission vehicle market.

What about renewable energy?

Despite the recent landmark ‘1.5C report’ from the Intergovernmental Panel on Climate Change (IPCC), the Budget was very light on details concerning climate change and the environment. There were no announcements within the Budget to encourage new investment in renewable energy in the UK, despite industry calls to support new onshore wind and solar.

Leading renewable developers have previously urged the Government to clear a path for subsidy-free onshore wind farms, allowing developers to compete for clean energy contracts. Cost projections, published by the Department for Business, Energy and Industrial Strategy (BEIS), show that onshore wind is currently the cheapest power source available.

Stay informed with EIC

Our Market Intelligence team keep a close eye on the energy markets and industry updates. For the most timely updates you can find us on Twitter. Follow @EICinsights today.

Visit our website to find out more about EIC Market Intelligence and how we keep our clients informed at a frequency to suit them.