Guest Blog: npower’s Wayne Mitchell on energy policies not reflecting the needs of business

Energy policies not reflecting the needs of business As the political parties start gearing up for a General Election next year, energy policy is likely to remain at the forefront […]

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By Geoff Curran

Energy policies not reflecting the needs of business

As the political parties start gearing up for a General Election next year, energy policy is likely to remain at the forefront of most manifestos. But what should they be looking to address?

Throughout the long journey to the recently finalised Electricity Market Reform, we’ve been engaging with our business customers and ensuring they have a voice with decision makers in government. But now the impact of those policies is beginning to be understood, we decided to find out what businesses are thinking now.

Confidence low

Almost 60% of the 600 senior decision makers surveyed by YouGov on our behalf are ‘not very confident’ or ‘not at all confident’ that current energy policies reflect the needs of business in Britain, while 62% expressed a similar lack of confidence in planned energy policies.

Cost is a key issue, with 81% ranking affordability as an important energy related issue for their businesses, ahead of security of supply (77%) and the move to a low-carbon economy (41%).

Reluctance to fund low-carbon energy

Businesses also appear reluctant to pay more to help fund low-carbon energy schemes, with 58% saying they are not willing or unlikely to be willing to see their bills increase to finance mechanisms such as the forthcoming Contracts for Difference.

Yet price increases are, of course, a reality, with energy and environmental policy costs becoming the fastest growing share of bills – contributing as much as £37 per MWh by 2020, according to DECC calculations.

Unless a future government does a complete u-turn and abandons the UK’s commitment to reducing our carbon emissions by 80% by 2020, it’s unlikely we’ll see a return to widescale fossil fuel generation and fewer renewable subsidies.

Save money – tap into world’s ‘first fuel’

But businesses should take heart. There is another way to reduce bills – and that’s to use less of the commodity in the first place. The International Energy Agency now calls energy efficiency the world’s ‘first fuel’, after finding that savings now deliver a larger ‘supply’ of energy than fossil fuels.

That’s why we are helping so many of our customers to better understand their energy use, take a holistic approach to reducing consumption and also take advantage of savings and even revenue generation from intelligent demand-side management.

But we hope to help a whole lot more – which is why I’ll soon be bringing you news of The Twenty Per Cent Imperative.

Potential to save £4bn over next 10 years

This report calculates that if the UK’s large businesses put energy reduction initiatives in place now, they could collectively realise annual savings in excess of £4 billion over the next 10 years, if energy inflation continues on its current trajectory. It also includes guidelines for how UK businesses can cut energy costs.

£4 billion is no small amount. But with bills set to increase, taking steps to limit the impact is key for business performance and competitiveness.