Lisa Gingell, director of energy management solutions company, t-mac Technologies, claims the government’s Energy Bill is in danger of failing as it hits supply, but not demand
While the UK’s industrial electricity consumers had been anticipating the bill’s arrival for more than 12 months, it still sent shockwaves through parts of the energy industry. Suppliers, in particular, read the small print with something approaching panic – only to leave them facing what government ministers are calling the ‘biggest transformation of Britain’s electricity market since privatisation’.
The aim of the bill – essentially to reduce electricity consumption – is an important, and long overdue, step forward. In industry its effects will be felt far and wide, particularly by those energy intensive companies which aren’t exempt from the extra costs of the switch to renewable energy. For months before its plans were announced, trade associations like the Energy Services & Technology Association (ESTA) and businesses whose success relies heavily on using large amounts of energy, had discussed what changes the legislation would bring.
The Energy Bill aims to move the UK’s energy production from a dependence on fossil fuels to a more diverse mix of energy sources, such as wind, nuclear and biomass. This is to fill the energy gap following the scheduled closure of a number of coal and nuclear power stations over the next two decades, and to meet the government’s carbon dioxide emissions targets.
We all knew renewable generation would be top of the bill’s agenda – it’s a media friendly subject which ticks green boxes and yes, ensuring sustainable and stable energy supply is an issue of vital importance to everyone in the UK. What was missing from the draft Energy Bill though, was any suggestion at all that the government is serious about the other side of the coin – managing energy demand.
On 30th November last year, a day after the draft bill was released, the Institution of Engineering and Technology (IET) released its own guidance calling for demand management measures to be fully integrated into energy policy going forward – and they’re quite right. At t-mac Technologies, clients are advised that the best way to save energy – and therefore the best way to save money on energy – is to reduce the amount they use. With technology like t-mac’s mini Building energy Management System, businesses can expect to shave up to 40% from energy bills – a huge figure if applied to businesses across the UK. Reducing energy usage also reduces carbon emissions, helping the government hit its targets.
A missed opportunity
It’s hard to understand then, why the government would have missed such a crucial part of the game.
Its Energy Efficiency Strategy, introduced last November, identified four significant barriers that have consistently hampered energy efficiency improvements. They were an underdeveloped market; lack of information on energy efficiency; misaligned financial incentives (which means the person who is responsible for making improvements does not always receive the benefits of their actions); and the hassle of installing efficiency measures. It argued that domestic energy efficiency is effectively targeted by existing initiatives, such as the Green Deal, but warns there is a greater need for policies that drive improvements in commercial, industrial and public sector energy efficiency.
As a member of the ESTA council, I understand the issues facing the industry. Money is tight for many, and pressures on bottom lines come from many different directions. With the Energy Bill though, the government had an opportunity to transcend what can be seen as petty, business-based worries and cast in stone a plan to bring demand management into the efficiency mix. Unfortunately, they seem to have missed the boat.
Summary
Despite the introduction of the Energy Efficiency Strategy, which recognises the potential for savings which can come from looking at non-domestic demand, what we need – and what I believe the energy and climate change secretary still has time to implement – an energy policy which sees energy demand and supply as a whole system, and doesn’t pick off individual elements piecemeal.
It seems the government still has much to learn about what the UK needs to do. Currently, businesses themselves are leading the way on energy reduction strategies, using companies like t-mac to help cut their energy bills. Although big polluters, the most energy intensive companies will be exempt from carbon taxes – SMEs and others will not. The energy and climate change secretary though, doesn’t seem to notice, and is still focussed wholly on supply – concentrating on pylons and power stations rather than productivity and purse strings. Hopefully I, and the Institution of Engineering and Technology, will be proved wrong, and Westminster will realise they have missed a golden opportunity around managing the energy the UK uses, rather than simply how it is supplied.
However, I don’t think anyone in the energy industry is holding their breath on that score.
t-mac Technologies
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