Business electricity users that reduce their consumption at peak times could receive a cash bonus under reforms set out in the government’s draft energy bill.
Under the plans, auctions will be held from 2014 to allow electricity generators to bid to supply back-up electricity at times of increased demand. Only generators that pay companies to curb their energy use at peak times will be allowed to participate in the scheme.
The government hopes that as well as being environmentally friendly, this ‘demand response’ approach will help to ensure that there are sufficient energy supplies to go around.
Energy analysts have welcomed the proposal, arguing that it will be a cheaper way of matching energy supply to demand than simply building new power plants.
But some argue that business electricity users will have to change their mindset about the energy their organizations use if they are to benefit from such a scheme.
Ronan O’Regan, director of PwC’s renewables and low carbon group said many businesses would have to rethink their approach to energy efficiency.
“It’s partly about engagement and convincing large energy users to think about [energy] demand as a source of revenue,” Mr O’Regan told online magazine Business Green.
“Their mentality is that energy is a cost to be kept down and the core business is producing widgets.
“It’s up to energy users to participate, but at least they have the option. And what should happen is that as energy prices continue to rise, it does start to focus [companies'] attention on how to better manage energy.”
Julian Morgan, managing director of the UK’s leading price comparison and switching service for business electricity users, agreed that firms needed to rethink their approach to using and paying for energy.
“Business electricity users do need to change their mindset; energy can be one of the most significant financial overheads that an organization has to deal with.
“Of course they need to think about using energy in the most cost-effective way possible. But more fundamentally, they need to ensure they are paying the most competitive tariff available.
“Monitoring energy use and reducing waste is meaningless if an organization is paying more than they need to for their business electricity in the first place.”
The UK draft energy bill, unveiled last week, also included plans to raise £110 million in investment to replace current generating capacity and upgrade the grid by 2020.
The service saves firms the time and trouble of trawling through thousands of business electricity and gas tariffs by analyzing prices from its panel of energy suppliers and matching them with the requirements of the organization.
Significantly, tariffs are compared on a like-for-like basis without the use of product names or payment plans, which means that quotes are easy to understand and accurate.
The Energy Advice Line’s expert team can also offer advice on how to switch suppliers, as well as a renewal reminder service to ensure you do not get caught in an expensive business energy rollover contract.
For more information visit www.energyadviceline.org.uk