Is your organisation energy compliant? Turn risk into savings in 2018
2018 it seems, is very much the year of compliance for businesses, but on a positive note, it could also mean the year for huge savings if you play your cards right.
From Energy Intensive Industry (EII) rebates to Climate Change Agreements (CCA), we’re breaking down the key types of compliance requirements coming up this year and what that means for your business. And make sure you take note of the compliance deadlines, as many are fast approaching.
Why not make 2018 the year you commit to introducing energy improvements, reducing carbon and making huge savings for your business? Not sure where to start? Read on.
Climate Change Agreements (CCAs)
Types of businesses: energy intensive industries such as chemicals, paper, supermarkets and agriculture
There is opportunity for businesses to save up to 100% relief by signing up to a CCA; but businesses need to act NOW, as while the deadline to make an application is October 31st, a large number of trade associations are imposing a June deadline, due to the length of time it takes to process a submission.
A CCA is a voluntary agreement made between UK industries and the Environment Agency to reduce energy use and carbon dioxide emissions. In return, operators receive a discount on the Climate Change Levy (CCL), a tax added to electricity and fuel bills.
Businesses which operate in energy intensive industries such as chemicals, paper, supermarkets and agricultural are eligible to apply for a CCA.
Operators will measure and report on their energy use and carbon emissions against agreed targets over four and two-year target periods.
The application process is cumbersome and we can put together a checklist to ensure that you have met every requirement of the application process.
Energy Intensive Industry rebates
Types of businesses: energy intensive industries including mining and heavy manufacturing
Energy intensive industries such as manufacturing could save thousands of pounds each year by looking at EII rebates and climate change agreements, but either through lack of knowledge, time or resources, many aren’t pursuing this option.
Energy intensive industries, including mining and heavy manufacturing, are distinguished by their trade and electricity intensity. In the 2015 Autumn Statement, the Government announced its intent to reduce the impact of renewables policies on the costs of electricity for most EIIs and in turn help these industries maintain their competitiveness internationally.
EIIs are currently entitled to cash compensation from the cost of these schemes and State Aid approval for the exemption scheme comes into effect this year. Under this exemption, companies operating in qualifying sectors will benefit, while non-exempt customers will pay extra to cover the exemption cost.
The Energy Saving Opportunities Scheme (ESOS)
Certain high-energy consuming businesses must carry out these energy consumption audits to avoid fines
ESOS is a UK regulation that requires around 10,000 large businesses to carry out energy efficiency audits to become compliant.
The benefits of ESOS are expected to be triple-fold – increasing energy efficiency, improving business profitability/competitiveness, while at the same time mitigating climate change.
The next deadline isn’t until 5th December, 2019 but there is a lot of preparation that must be done to ensure you are compliant. This includes carrying out mandatory assessments of your organisation’s current energy use. The ESOS regulations require the audit to be repeated every four years.
Acting as your lead assessor, we will lead your business through the process over the next 12 months, ensuring accurate measurement of your existing consumption, identifying areas of reduction and providing a robust strategy for compliance.
You should be concerned if you are currently on a Half Hourly energy supply and regularly exceed it
From 1st April, Ofgem will enforce DCP161, which will result in higher energy costs for many customers. Under DCP161, customers on a Half Hourly energy supply will be penalized with an excess capacity charge for consuming more than their available capacity.
DCP161 is being enacted to combat the additional unexpected stress and resulting damage put on local Distribution Networks when customers exceed their agreed usage. As a result, going over the available capacity will result in you paying significantly more for the excess use of energy. The penalty charges will help DNO’s recover the additional costs which help in maintaining/fixing and upgrading the network.
To ensure you are compliant, you can check your invoices to see if you are regularly exceeding your HH supply and paying excess charges. But we understand that your billing and HH data are complex and not easy to decipher. We can use our understanding of this area to help you analyse your current HH supply data to determine whether or not you can reduce your energy consumption without having to increase your available capacity.
We will also ensure you are best aligned in your HH supply contracts and compliant when the new legislation comes into force on the 1st April.
Sitting alongside DCP161 with the same 1st April deadline is DCP228, a regulatory OFGEM charge which will alter the way distribution charges are calculated and ultimately, the way business properties are billed. With distribution charges currently account for up to 19% of your bill, we would strongly advise that you take a detailed review of your energy peaks and troughs in order to reduce costs.
The main distribution charge is DUoS (Distribution Use of System) which are colour coded to three time bands: Red, Amber and Green. Red represents peak periods, and therefore much higher charges than Amber or Green non-peak periods.
Unfortunately, the introduction of DCP228 will mean rises in energy costs for many, which is why it is important to seek advice right now.
Private landlords have until 1st April to adhere to energy efficiency standards for private rentals
Any properties leased out in the private sector must meet an energy performance rating of at least E on an Energy Performance Certificate (EPC) for both lets and renewals of tenancies from 1st April, 2018 and for all existing tenancies by 1st April, 2020.
It will become unlawful to rent a property with less than an E rating and landlords could face civil penalties up to £4,000. Many landlords are hesitant to take the necessary steps to comply, often fearing resulting high costs.
Instead of seeing compliance as another headache, we are urging landlords to flip this on its head and see it as a positive, as there are huge benefits from making properties more energy efficient:
- Tenants will often be willing to pay more for properties that are energy efficient, recognising the cost savings on their utility bills
- Ensuring adequate insulation can have huge impact on energy bills. Insulated walls and double-glazed windows stop heat escaping and help reduce energy costs
- Renewable energy sources such as solar PV and energy efficient alternatives to energy guzzling products such as light bulbs, are the fastest and most cost-effective way to reduce energy consumption, typically repaying the investment, through reduced energy consumption, within 1 to 2 years
- Most energy efficiency projects required to meet the standards offer payback within three years or less
- Now is the perfect time for landlords to check existing bills and ensure they are being billed correctly. Changes to supply capacity will also apply from April, so now is the time to ensure correct billing moving forwards
How to comply
We are adept at understanding whether or not your sector is eligible for one or more of the above schemes to save money and whether or not you have a legal obligation to comply with others. We can work with your business to ensure that the compliance process is met and that your cost-saving potential is maximised. Reach out to us to discuss how we can help.