Energy Intensive Industries

Energy Intensive Industries: An Energy Guide

Have you ever read an article on energy and thought “well that sounds great, but does it even apply to me?” It’s a question that we hear so often from our clients that we’ve decided to do something about it.

Moving forward, we’ll be focussing on answering questions key to your industry. Whether you’re a landlord of a two-bedroom apartment, the owner of a chain of luxury hotels or even running a large-scale industrial site, we’ll tackle the issues closest to you.

For our latest feature, we focus on Energy Intensive Industries (EIIs).

As large consumers of energy, Energy Intensive Industries have the unfortunate double-headed concern of rising energy costs and managing the amount of energy they consume.

A key buzzword for the year 2019 has been climate control. More than ever, large consumers of energy (especially industrial firms) are coming under scrutiny for the volume of emissions they produce.

But how you can you control the amount of energy you use? How can you neutralise your carbon footprint? And what’s the cheapest way to purchase your energy?

In the following piece, we’ll address them all.

I have multiple sites. Is it better to arrange energy contracts one at a time? Or buy in bulk?

You should usually look to buy in bulk. Traditionally, when negotiating with energy suppliers, the higher consumption, the lower the unit rate. Remember, suppliers want your business. The more sites you put through them, the more valuable you become as a customer.

Arranging energy contracts for multiple properties at the same time is likely to prove far more cost-effective over time.

I still have a few years left on my current contract, surely there’s no point in looking yet?

You couldn’t be more wrong. UK businesses are entitled to renew their energy whenever they please, regardless of how long is left on their current deal. With energy costs forecast to rise, a 2019 rate in 2021 would be more than advantageous.

As an act of self-protection, an energy supplier will build a risk factor into their current pricing if you’re looking to negotiate a future contract.  That’s why it’s worth having a trusted advisor to help you weigh up the best scenario for you.

Many Energy Intensive Industries now engage with consultants to work on their behalf to renew their energy contracts regardless of the length of time remaining. Once you’ve agreed terms and signed the contract, your new tariff will go live immediately following the completion of your current term.

What is flexible energy buying? And would it be appropriate for me?

Flexible procurement is a method of purchasing your energy in large or small “blocks” prior to usage. The size of these blocks varies between businesses, with some ranging from seasons, quarters, months, weeks or – on some contracts – a day ahead. In some cases, businesses have even been known to make transactions as small as a tenth of a MW.

The approach itself is considered ideal if you’re an energy intensive firm looking to mitigate risks in an often-volatile market, especially when energy takes up a significant proportion of your overheads. A business can exploit unusually low prices in the market by purchasing energy in bulk, thus eliminating higher costs further down the line when higher prices inevitably return.

How can I offset my carbon emissions without impacting my business outputs?

There are numerous ways you can offset your carbon emissions without having an adverse impact on your business. If using less energy is not an option for you, investigate what you can do for the environment in order to balance your carbon footprint.

There are numerous woodland creation schemes and projects taking place throughout the UK, with 13,000 hectares of newly-created woodland reported in 2018 alone and more businesses than ever getting behind the initiative. Speaking to an energy expert will allow you to identify those nearest and most appropriate to your business.

You may even investigate the possibility of purchasing carbon credits, which are certificates denoting that a company has paid to have a certain amount of CO² removed from the atmosphere. By correctly calculating your deficit levels, you can purchase these credits to offset your excess emission levels.

How can I reduce my costs during Triads and peak demand times? Would a battery storage solution work for me?

More than ever, businesses are facing an increasingly volatile national grid, where limited site capacity and rising demand are seeing large energy consumers paying way above the odds during peak times.

Regardless of the size of your business, a battery storage solution could work for you. This involves storing electricity during cheaper off-peak hours to enable you to disconnect from the national grid during expensive “red band” and triad periods. This can allow you to move simultaneously between battery power and the grid depending on demand levels.

Most businesses work alongside an energy consultant who can help to size and design a bespoke battery solution to fit their needs.

Like most Energy Intensive Industries, we already have an internal energy team, why would we need to work with a third-party?

Energy consultants are experts at what they do. It’s their job to constantly monitor the energy market, identifying industry trends and changes in prices.  Through such work, agents can identify exactly when you should start negotiating your energy contracts, as opposed to simply entering the renewal process once your current deal is coming to an end.

A true energy consultant wouldn’t just stop with your energy procurement. Any consultant worth their salt will have the ability to incorporate the latest and most complex technology solutions into your energy management strategy. Ideally, they’ll work alongside your internal energy team to design bespoke solutions that will have you saving energy in ways you’ve never imagined.

As a large consumer of energy, are there any charges I’m exempt from?

The UK government recently acknowledged that the increase in retail electricity prices risks reducing the competitiveness of the UK’s most electricity-intensive businesses on the international stage.

To address this, the government has developed an exemption scheme providing relief to help Energy Intensive Industries in the UK compete with the lower energy costs of similar sized EU businesses.

Through the new scheme, they are granted exemption from up to 85% of the costs of Contracts for Difference (CfD), Renewable Obligation (RO) and Small-Scale Feed in tariff (FiT).

Qualifying criteria is rather extensive, so firms are advised to speak with an experienced energy consultant to identify

 How can I make the most out of my energy long-term?

Moving forward, it’s important that businesses start taking a holistic approach to their energy. Think of your energy as a strategy, broken down into three clear areas:

  • Procurement: Paying as little as possible for the energy consumed.
  • Management: Consuming as little energy as possible.
  • Revenue: Generating revenue stream through energy.

Start considering your energy as an opportunity, not a chore.

As a large consumer of energy, you should be utilising all three. If you don’t think you are, it’s time to get on the phone and speak with someone who can help. An energy consultant will be happy to sit down with you and assess whether you’re doing everything you can to make your energy strategy work for you.

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This blog was brought to you by Great Annual Savings (GAS). An expert in the energy field, GAS produces a wide-range of informative business energy-related content, accessible via the Business Advice Hub.

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