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Browse our no-nonsense EnergyIntel – a mix of informative infographics, explainer videos and blogs. Our Intel covers the energy landscape, energy buying & markets, managing energy, and sustainability. 

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Environment & Sustainability

Scope 1 & 2 Emissions Explained

There’s an increasing need for businesses to reduce their carbon emissions, and for many already, reporting Scope 1 & 2 emissions has become mandatory. This is due to SECR compliance and the introduction of the Task Force on Climate-related Financial Disclosure (TCFD), due to roll out by 2022.

And for all businesses looking to become more sustainable and work towards net zero, understanding Scope 1 & Scope 2 emissions, and how to reduce and eliminate them is an ideal starting point. 

These emissions are in relation to systems/processes that are in reasonable control of your business.

Scope 1 are from a businesses company owned assets, think your company facilities and vehicles – these are known as your direct emissions.

Scope 2 are the indirect emissions caused from the purchase of power, steam, heating and/or cooling in order to run your operations.

Benefits of knowing and reporting on your Scope 1 & 2 emissions include:

  • Lower energy and resource costs
  • Improve transparency with stakeholders
  • Increase brand reputation
  • Positive engagement with employees and consumers

Getting to grips with Scope 1 & Scope 2 emissions is critical for an effective carbon reduction strategy. Discover how your business can work towards carbon net zero, get in touch with one of our experts today.

  • Author: Antonia Cheng, Energy Analyst & Conor Howard, Energy Analyst

  • Designer: Robyn Miller, Marketing Manager

HVAC Optimisation Infographic

Typically a HVAC system’s energy consumption accounts for more than 40% of a commercial building’s total energy usage. So it’s no wonder Facility Managers, Estate Managers and Operations Directors are exploring ways to optimise HVAC efficiency.

Quick wins like changing filters on schedule and doing regular maintenance will make small improvements, but there are other ways to maximise energy efficiency. What are they? Well, our Energy Improvement Managers recommend these three things…

Control Loop Optimisation – make sure that the control loop for the AHU (Air Handling Unit) system has been set to your building requirements and not left on the factory setting. Your controls system contractor can optimise these control loops to the system, saving on energy and prolonging the life of components.

Dead Band Control – having heating and cooling on simultaneously, or a constant cycle between the two, wastes energy and reduces the life of a HVAC system. Eliminate the possibility of this by introducing a dead band control. A dead band is where no heating or cooling is running, saving you energy.

Fan Speed Reduction – the AHU motor should be controlled by a VSD (Variable Speed Drive). One way to reduce energy usage is by reducing the speed of the fan and the air flow rate. Fan Law 3 of the Fan Affinity Laws states that changing the fan speed by X will impact the horsepower threefold. So decreasing the fan speed by 10% will reduce energy consumption by 30%. There is a minimum speed that you can set the VSD control to prevent the motor overheating, but considerable savings can be achieved.

Although it might look like things are running efficiently, there are always ways to improve and increase business energy efficiency, reducing carbon emissions and costs. If you want to explore how you can tackle your own hidden energy waste, get in touch with one of our experts today. 

  • Author: Andrew Butterworth, Energy Improvement Manager

  • Designer: Robyn Miller, Marketing Manager

We sat down with Chris Bennett, our Pricing Analyst, to find out about volume tolerance, what it is and how it works…

What is Volume Tolerance?

Volume Tolerance, also known as Take or Pay, is a contract clause that allows suppliers to bill the customer for any significant changes in their annual consumption figures – these are agreed when the contract is signed.

Why does it exist?

The 2009 economic crash caused an 8% fall in business electricity consumption, this left suppliers with a huge amount of surplus energy that had to be sold way below its original price. 

So volume tolerance was introduced as a standard to all business contracts to protect suppliers when buying large volumes of energy. It’s a way to share those huge costs if the unexpected happens.

COVID-19 and Volume Tolerance 

COVID-19 has forced many businesses to close their doors for lengthy periods of time, which will have had a huge impact on electricity and gas consumption, way beyond the 8% seen back in 2009. As such, volume tolerances are being breached on an unprecedented scale.

The graph shows a 30-day rolling average of electricity demand from a portfolio of Manufacturing businesses. As you can see electricity consumption drastically dropped during lockdown one, two and three, which has left suppliers with a surplus of energy.

electricity demand from a portfolio of Manufacturing businesses

How Volume Tolerance works

Typically Volume Tolerance brackets are set at 80/120%, which means that a business can use 20% more or less energy annually than what was originally agreed for the contract period. The volume tolerance is usually activated when a business goes above or below this level. Occasionally, the tolerance can be widened or even removed, but this depends on the supplier and how much appetite they have to win the customers business.

If suppliers are looking at enforcing the Volume Tolerance clause, most of them will review the consumption figures annually and then take a view on whether to activate the clause and charge the customer for any breaches of the +/- 20% bracket.

If major events such as COVID-19 have impacted your business and in turn, your energy consumption it’s worth checking your current contract terms, as suppliers are likely to be applying these charges. If you’re not sure where to begin, our experts are here to help.

  • Author: Chris Bennett, Pricing Analyst 

Before we go into what the Targeted Charging Review (TCR) is, here’s a quick explanation of what transmission and distribution charges cover:

Transmission Network Use of System (TNUoS) charges recover the cost of providing and maintaining the transportation of electricity to your business.

Balancing Services Use of System (BSUoS) charges relate to the costs of the day-to-day operation of the transmission system – controlling the amount of energy in the system.

Distribution Use of System (DUoS) charges recover the cost of installing and maintaining the local distribution networks.

Why is TCR being implemented?

Ofgem is implementing TCR to create a fairer energy network and spread the cost across all energy users. The current system allows users to adjust operations at peak times to avoid transmission and distribution charges, leaving others to pay the balance.

So what’s changing?

From April 2021, BSUoS will be charged based on gross demand and will remove the benefit to businesses with on-site generation.

From April 2022, DUoS will be charged as a fixed (£/day) method, instead of the current (p/kWh) method. Charges will depend on if you have Half Hourly (HH) or Non Half Hourly (NHH) meters.

From April 2023, TNUoS will be charged as a fixed (£/day) cost for all demand customers instead of the current billing method of (£/MW) for HH metered usage, and (p/kWh) for peak consumption (4pm-7pm) for NHH metered usage.

What does this mean for businesses?

  • All businesses will be allocated a charging band based on their consumption, determining their charging threshold.

  • If you have a Triad avoidance strategy in place – reducing your consumption at peak times – this will no longer help avoid DUoS and TNUoS charges.

  • If you have on-site generation, you’ll no longer benefit from exporting on-site generated electricity during Triad periods (peak times).

  • All businesses will either see an increase or decrease in their total energy bill.

Charging Bands – something to consider after being placed in your band…

If your business is at the lower end of the charging band then you are likely to pay more for the fixed charges, compared to a high consumer in your bracket.

And if you’re a high electricity consumer compared to your charging band’s average, you’re likely to pay less in fixed charges when compared to a low consumer in your bracket.

The important thing is knowing where your business stands as TCR continues to be rolled out.

Two Real Life Examples

After conducting a TCR review, one of our clients was expecting an annual increase of £40,000 – a large sum to allocate additional budget for each year. But it’s not all negative, things can be done to minimise or even greatly improve the outcome. By reviewing their procurement strategy and working with our Energy Projects team the client is now expecting an annual saving of £86,000, so that’s a £126,000 per year swing in costs!

And it’s not all about increases. After conducting a TCR Impact Report, one multi-site client will see a saving of £12,000 per meter per year – without having to make any changes to their energy consumption or procurement strategy.

The important thing is knowing where your business stands as TCR continues to be rolled out. To uncover how your business is affected by the TCR, request a TCR Impact Review, fill out your details below to start the process and receive a complimentary TCR Impact Report from our team of experts.

  • Author: Robyn Miller, Marketing Manager

Energy explained - Infographic Explaining Energy Contracts

Fully fixed contracts have the commodity cost and the Third Party Charges fixed for the duration of the contract and are usually not subject to change. If your business wants budget certainty then a fixed contract is the ideal choice. All agreed unit rates are secured for the length of the contract – meaning you know in advance what you’re paying. 

You often pay a higher price for the security as the supplier takes the risk – suppliers can include a risk premium in the unit rates to cover any legislation change that would result in Third Party Charges increasing. You are also bound by the volumes set at the time of purchase, unless you have agreed a volume tolerance free contract – this is something which has been problematic for many businesses during COVID-19.

Pass Through contracts split your energy bill between the fixed commodity costs (the cost of your energy) and non-commodity costs (third party charges) which can vary over time. This means any non-commodity charges the supplier incurs will be passed to you, and you take the risk of these costs increasing. 

Pass Through gives you the ability to benefit if the non-commodity costs fall in the future. These contracts also give you the opportunity to manage your usage patterns to avoid time of use periods, which can be beneficial and potentially lower your energy bill.

You don’t get the budget certainty of fully fixed and these contracts are much more complicated. With many of the third party charges being passed through, suppliers often bill on assumptions of what those charges could be and then reconcile. This means you may see additional charges not originally budgeted for on your bill.

Flexible contracts is a buying strategy where the commodity costs are determined by how your volume is traded throughout your contract and the third party charges are passed through.

You can buy in smaller chunks, taking advantage of fluctuations in the market and locking in prices at optimum time. By taking full buying control, there is potential for good savings opportunities; if you know what you’re doing.

There is no budget certainty on a flex contract. The commodity cost is determined by how it has been traded and the third party charges are subject to reconciliations in the same way pass through contracts are.

What ever your appetite for risk, make sure you work with an energy partner who understands the markets and your business requirements. Whether it’s a budget certain fixed energy contract, a variable passthrough contract or a risk managed flexible energy contract our Energy Traders work with hundreds of clients to choose the best contract for their business.

  • Author: Chris Bennett, Pricing Analyst 

  • Designer: Gabriel Ashworth, Marketing Assistant

Systems change is a vital part of an energy audit. Auditors will look for the following information to review a business’s current energy management system:

  • Do they have a pre-existing energy management policy?
  • Do they currently know their energy consumption?
  • Do they have a well maintained BMS control system?
  • What other, if any, control systems do they have in place?

Having these systems in place is a fantastic tool for controlling your energy consumption. Having visibility of said consumption creates an effective starting place for creating positive change. Keeping you in control of your energy usage by monitoring spikes and dips and managing your carbon footprint far easier, a growing issue throughout the supply chain.

It is becoming far more common for end-users to request carbon contribution information from their suppliers and having this information available and up to date means you can keep up with these demands more readily.

  • Presenter: Andrew Bardsley, Head of Energy Management

  • Presenter: Andrew Butterworth, Energy Improvement Manager

  • Video Editor: Gabriel Ashworth, Marketing Assistant

Hardware in a business is a big consumer of energy, so energy auditors will often look to these to cut energy consumption. The usual focus on a site audit in terms of hardware is on the larger energy consumers such as:

  • Chillers
  • Compressors
  • Large process equipment
  • Lighting
  • HVAC Systems
  • Checking all controls are set to automatic

The reviewing of these assets is paramount, as they are often essential to the operation of the business. A failure to review the health of an asset can result in higher energy consumption due to inefficiencies and further down the line, shutdowns if/when they need repair.

Conducting frequent reviews of these assets and employing a comprehensive Planned Preventative Maintenance (PPM) schedule minimises the risk of downtime massively. When doing an assessment, look at the age of assets, typically the lifespan of large assets is 15-20 years, but many businesses exceed this, resulting in old, degraded and less efficient machinery.

  • Presenter: Andrew Bardsley, Head of Energy Management

  • Presenter: Andrew Butterworth, Energy Improvement Manager

  • Video Editor: Gabriel Ashworth, Marketing Assistant

Behavioural change is a huge part of creating a positive transformation in your business’s energy consumption patterns, and it’s a relatively low/no-cost way of doing so. When looking at behavioural change, to begin with, auditors will focus on a few key areas, most notably:

  • Technology – are energy-saving modes being used?
  • The pre-existing energy-saving mindset in the business
  • Correctly set thermostats
  • Windows and doors being closed at the right times
  • Are staff willing to engage?

Stressing a common goal across the business committed to saving energy makes energy efficiency easier as inaction can lead to more energy waste, which in turn means having to report a larger carbon footprint.

To ensure this doesn’t happen, auditors will employ a strategy that encourages workers to change their energy habits through education, and set up green teams and other resources that put a focus on energy efficiency.

  • Presenter: Andrew Bardsley, Head of Energy Management

  • Presenter: Andrew Butterworth, Energy Improvement Manager

  • Video Editor: Gabriel Ashworth, Marketing Assistant

Net Zero is on every business’s mind, so we’ve asked our Director of Sustainability, Peter Catlow, to put together a quick guide to help you understand Net Zero, what it is, why it’s important and when you need to take action.

What does Net Zero mean?

Carbon Net Zero refers to the balance between the amount of greenhouse gas (Carbon Dioxide, Water Vapour and Methane) produced and the amount removed from the atmosphere. We reach Net Zero when the amount we add is no more than the amount taken away. (National Grid)

What is a Net Zero target?

To achieve Net Zero it is necessary to address the three levels of emissions created by a business (or individual). These levels are known as Scope 1, 2 and 3.

Scope 1 – Directly created by your business.

Scope 2 – Created by your use of fossil fuel-generated energy.

Scope 3 – Created by your supply chain.

What’s driving companies to set a Net Zero target?

Mandatory Reporting

A number of mandatory reports are driving businesses to set Net Zero targets. SECR requires circa 12000 UK companies to disclose information about their energy consumption and carbon emissions. TCFD has been created to improve and increase reporting of climate-related financial information.

Government policy

UK government has set a target of being carbon neutral by 2050, and are incentivising businesses to make this a reality. Bans on gas-powered vehicles by 2030; investment in renewables; tax breaks for EV cars are just some of these incentives.

Customer attitudes

Consumers are taking into account the footprint of the businesses they buy from, not taking this into account could be fatal to your cash flow.

Climate change is a serious threat

Rising sea levels, extreme weather, wildfires and droughts are symptoms of climate change.

Cost reduction

Cutting your consumption also cuts costs, lending a helping hand to the cause can actually save you money.

When should companies aim to be Net Zero?

Current Government targets are to be Carbon Net Zero by 2050, although the sooner you set out on the road to Net Zero the sooner you reap the benefits, environmentally, reputationally and economically.

What’s the first step to Net-Zero?

Measuring your carbon footprint and assessing areas of improvement is key.

Start with Scope 1 and 2 emissions as they are under your direct control, then look to understand your Scope 3 emissions. 

Answering these questions is a good start:

  • Are you buying energy from certified renewable sources?

  • Do you have systems for measuring wasted energy and taking action?

  • Do you have a programme in place to develop the NetZero capability of your Supply Chain?

Which internal stakeholders should be involved?

Short answer: everyone. Net Zero is a large scale operation and for it to be successful, everyone needs to be involved.

It speaks to a wider purpose, relating to the future of our upcoming generations, our environment and the planet.

  • Author: Peter Catlow, Director of Sustainability

Energy explained - InfographicTRIAD Reconciliation

The TRIAD period runs between November and February, the official dates are released by the National Grid in March each year and are based on the 3 highest peaks of demand during this period (Nov-Feb), taking into account the ‘10 clear day rule’.

To factor these TRIAD charges into what business are invoiced, suppliers estimate what a business is likely to consume during these peak periods and charge accordingly throughout the year. The TRIAD charges a business pays in advance are held until the actual TRIAD periods are released.

Once the dates are announced, suppliers will review these published periods to check that the invoiced charges over the year cover these charges and will reconcile as needed. The reconciliations appear on customers’ invoices between April and June and can be in the form of a credit or additional charges.

If businesses were able to avoid the TRIAD periods over the course of the winter period then they will probably see a credit on invoices, however, if they did not take action or were unable to avoid the warning periods then they will probably see an additional charge on their reconciled invoice.

Estimated Triad periods for 2020/2021:

7th Dec 2020, 17:00 – 44,353 MW

7th Jan 2021, 17:30 – 45,328 MW

10th Feb 2021, 18:00 – 44,886 MW

Our Triad alerts correctly predicted all three winter 20/21 triad periods.

  • Author: Michele Martin, Head of Customer Experience

  • Designer: Robyn Miller, Marketing Manager

COVID19 has had a considerable impact on the UK economy and has resulted in further issues for businesses when it comes to arranging energy supply contracts. Certain industries have been impacted more than others: with hospitality, leisure, tourism and also manufacturing businesses reliant on international trade feeling the effects.

The COVID Credit Crunch is creating a number of scenarios where suppliers are unable to provide businesses with the required credit, which has a knock on impact, with business typically being left with one of three options:

  1. They are forced to take out contracts with alternative suppliers that might not meet all of their objectives or requirements
  2. They are forced to pay security deposits upfront, where previously this wouldn’t have been the case
  3. They are having to accept paying premiums of up to 10-15% on their contracts.

Whilst it depends on the supplier, more businesses are now seeing a requirement for a case to be built on their behalf, in order to prove their eligibility for credit. If you find yourself in this situation make sure you work with an energy consultancy that understands your requirements.

  • Presenter: David Ford, CTO

  • Video Editor: Gabriel Ashworth, Marketing Assistant

The UK has curbed its electricity demand during the last decade, using almost 20% less electricity in 2020 than it did in 2010. Even ignoring 2020 data as an outlier, 2019 showed a 14% reduction in demand compared to 2010 figures. 

This combination of reduced demand and changing the mix of the electricity on the grid has enabled the UK to reduce its scope 2 emissions by 70% over the decade, but there is still more work to be done to meet ambitious targets set for 2030 and furthermore to be carbon Net-Zero by the planned 2050, particularly if the UK’s demand for electricity is likely to double as anticipated in the Governments latest Energy White Paper.

Investment in offshore wind will increase the share that renewables will be expected to bear and while nuclear power will continue to provide baseload. It is expected that carbon taxes on gas will increase considerably, making current ‘gas to grid’ generation much less attractive than it is today, further increasing the reliance on renewables.

Businesses can get ahead of the curve and all but eliminate their scope 2 emissions from electricity now by committing to purchasing 100% renewable power as part of their electricity supply contracts, and products like the 100% renewable energy basket from Businesswise Solutions can provide access to premium & emissions-free power regardless of the size of your business.

  • Author: Paul Scarborough, CMO

  • Designer: Robyn Miller, Marketing Manager