While news of rising energy prices has, quite rightly, been hitting headlines recently, the focus on tariffs is an unwelcome distraction. Solving the real issues facing the energy market over the next 10 years requires focused attention on how much energy we use and why, both by businesses and the public sector. Using less energy is the surest way to deliver sustained cost savings over the long term, whatever the tariff.
The rising cost of energy is a trend that’s here to stay. For electricity users, power station closures threaten to push up prices and increase the likelihood of power cuts. By the end of March 2013, the UK is expected to shut 10 per cent of the generation capacity we’ve relied upon in recent decades so the options for replacement are limited in the short term. EU legislation (the Large Combustion Plant Directive) will put coal out of the running and nuclear, even once approved, will take years to construct. Attention has therefore turned to new gas-fired generation to deliver scale at pace.
However, this presents its own challenges. Gas-fired generation leaves the UK reliant on imported fuel, which is both expensive and volatile. It also takes years to construct – even the most advanced project in the pipeline won’t be ready until 2016. And new gas-fired generation today locks us into carbon emissions for the coming decades, putting our climate change targets at risk. End users need to look elsewhere to tackle inflated energy budgets and manage unexpected carbon costs.
Savvy businesses have already tackled the quick win energy efficiency opportunities – from thermostats to light bulbs – and yet, for many, these opportunities to stabilise and reduce energy costs remain unexploited. Despite the threat of increasing prices, we still see businesses struggling to make the case for even short payback measures. Sometimes it’s because budget holders don’t buy into the threat. Sometimes it’s because energy managers don’t have sight of future prices.
In contrast, front-running businesses are tackling the challenge head on, through transparent energy management strategies that join up price and volume. And that’s no mean feat, but one worth working hard towards achieving. If one thing comes out of the complexity highlighted by the recent tariff debate, it’s that the most certain savings on our energy bill are from the energy we avoid using at all.
☛ Caroline Pitt is director of consulting at energy and carbon management specialists, Utilyx.