A Green Deal for businesses?
DECC has today published a new consultation on the Green Deal, a government initiative which will invest £14bn in energy efficiency from October 2012.
Although the domestic market is the main beneficiary of the green deal, there are some benefits for businesses too.
The consultation says that every British business will be able to install energy-saving measures like insulation with no upfront cost; the repayments will be made from the savings the business makes on its energy bills.
While help with eenrgy efficiency is likely to be welcomed by many businesses, there is a flipside: the cost. The money to pay for the Green Deal has to come from somewhere and the consultation also includes an analysis of what impact the Green Deal will have on on business energy prices and bills:
As the graphic shows, while policy will mean an eventual reduction in energy bills for domestic customers, it will lead to an increase for businesses.
The consultation emphasised that while it’s important that businesses play their part in the transition to a low-carbon economy, it’s vital that they remain competitive too. So before the end of the year, the government will be announcing a package of measures to help energy-intensive businesses.
I asked our director, James Constant for his take on the Green Deal consultation:
“Any help to enable businesses to reduce their energy overheads and protect the environment is to be welcomed, however this should not be at the expense of increasing the transparency of the market and fair pricing for businesses.
“For too long domestic customers have been the sole focus of market improvements and businesses have been left to suffer in hopeless silence; as a way to raise business energy up the agenda this move is welcomed, but there shouldn’t a sting in the tail of price rises to support the benefit for the few who are able to make use of the energy efficiency measures being proposed.
“It would be far better would be to increase market transparency, encourage innovative new suppliers to enter the market and make smart meters and active energy management the cornerstone of business energy efficiency. This would not only reduce unnecessary energy costs, but also boost businesses’ cashflow with accurate billing.”
Lunch with Charlie: energy policy and reform
Lunch with Charles Hendry MP: energy policy and reform were on the menu. Image by DECC.
Earlier this week I was in the very fortunate position to be able to listen to Charles Hendry MP speak over lunch.
As is often normal practice, the Chatham House Rule applies. I’m sure most of you know what that means, but just in case, here’s an explanation: the Chatham House Rule allows people to speak as individuals, and to express views that may not be those of their organisation, and therefore it encourages free discussion. People usually feel more relaxed if they don't have to worry about their reputation or the implications if they are publicly quoted.
So taking that in to account, that is about it for this blog entry. Thanks for reading.
Only kidding, well, sort of. I am not going to mention anything that would cause me to break the tradition and code of the Rule, but I can share some of what was discussed with you.
First of all let’s make sure we know who Charles is and what privilege he holds in Her Majesty’s Government.
He was born and brought up in Sussex and attended Rugby School from 1972-1976 before going on to study for a degree in Business Studies at Edinburgh University from 1977-1981.
Charles Hendry has been Member of Parliament for Wealden since 2001. Prior to joining the government, he was Shadow Minister for Energy. He previously held the position of Shadow Minister for Energy, Industry and Postal Affairs. And before that, he was the Deputy Chairman of the Conservative Party (2003-05), Shadow Minister for Young People (2002-05) and Shadow Minister for Industry and Enterprise (May – December 2005).
He is now the Minister of State for the Department for Energy and Climate Change and he supports the Secretary of State (Chris Huhne) on:
- security of supply,
- resilience and emergency preparedness,
- international energy,
- renewable energy,
- the Renewables Obligation,
- Feed-In Tariffs (joint with Greg Barker),
- CCS, gas and coal policy,
- nuclear policy,
- grid policy including smart grids and network of recharging points,
- smart meters,
- oil and gas exploration, licensing and revenues,
- offshore environment and decommissioning,
- planning reform and consents,
- regulation and competition in the energy sector (incl. nuclear),
- waste and decommissioning policy for new nuclear,
- nuclear safety and regulation,
- nuclear non-proliferation,
- Energy Council,
- Coal Authority,
- Electricity Market Reform - supporting the Secretary of State,
- country lead on: EU, Russia and former Soviet States; Scandinavia; North Africa and the Middle East,
- lean regulation.
Most of Charles’s career was spent in public relations both related to business and politics before becoming an MP; so it comes as no surprise that he is an accomplished and entertaining speaker.
Now anything and everything I am going to mention is in the public domain and will not cause concern or upset from any attendees at the luncheon or break the Chatham House Rule as stated earlier.
I must also confess that it was quite difficult to hear Charles at times. The reason being that he had to rush off to another engagement so everyone was eating their first course while he was talking. So in between the clunking and clicking, snuffling, munching and chomping this is what I got.
The key elements covered during the session fall into five categories:
- energy policy,
- the role of nuclear,
- Electricity Market Reform,
- working with industry,
- Energy policy.
Times are very tough but exciting too. The events in Japan and Fukushima reinforce the importance of safety in relation to future development of energy generation solutions. In fact, on the same day the UK safety report on Fukushima was released.
Charles spoke of the challenges faced in coming up with an energy policy that delivers safe, secure, low-carbon and affordable energy (we can help with this last one).
He made it quite clear that to achieve all of the above we need a mixture of renewable, clean coal and gas (at least for now) and nuclear.
Our energy generation fleet is aging beyond its useful life span and significant investment is required.
Role of nuclear
Charles believes that Britain can provide leadership to other nations in making nuclear safe at a time when others are panicking. Safety is paramount, but so equally is energy security, lowering carbon output and affordability. We have the opportunity to pave the way in next generation nuclear power.
There is no escaping the fact that significant investment is required in our energy infrastructure and the government is doing everything in its power to ensure that the conditions are right for investment from parties both inside and outside of Britain. Over the next decade over £110 billion is the sort of figure we are looking at.
Electricity Market Reform
The most significant shake-up within the industry for 30 years. It is hoped that the EMR will achieve the following:
- get us off the hook of relying on imported oil and gas by creating a greener, cleaner and ultimately cheaper mix of electricity sources right here in the UK.
- nurture a new generation of power sources including renewables, new nuclear and carbon capture and storage.
- bring new jobs and create new expertise in the UK workforce.
- establish a long-term role for hydrocarbons like gas as well, taking account of how the global market has changed over the years.
Now I am writing this just as the news has come out that SSE has confirmed that it is going to allow all of the electricity which it generates to go on the wholesale market, and it will buy back what it needs from the market for its retail customers. this is quite radical and we will have to see what the other energy suppliers do to follow this.
Could this be an attempt to head off the potential referral by Ofgem (and the stranglehold the ‘Big Six’ have) to the Competition Commission? The advantage of moving first goes to SSE!
Working with industry
We need an infrastructure that allows our economy to flourish. This starts with creating jobs to build the infrastructure that will in turn will keep the wheels of commerce moving and allow businesses to trade from the output of the changes.
Charles said it was also up to government to help British companies to trade and secure opportunities elsewhere in the world.
- The draft Energy Bill: a five-minute summary
- 60% increase in business energy costs as average turnover falls by 6%
- Business week in brief: 11th May 2012
- Ed Miliband and the Queen talk energy
- Interview with Steve Fitzsimons of new business energy supplier, Hudson Energy
- Business week in brief: 4th May 2012
- The see saw of corporate profit
- Business week in brief: 27th April 2012
- EDF Energy’s Business Customer Commitments: four key pledges
- Businesses buck the trend when it comes to smaller energy suppliers