The outcome of June’s referendum will have come as a shock to many, and for those companies that chose to “wait and see” some urgent business planning is now taking place. It’s probable that leaving the EU will have a profound impact on our energy supply and security over the next 5-20 years, as well as potentially revolutionising the regulatory regimes surrounding air quality, fuel storage, energy-from-waste, carbon trading and environmental reporting.
In many cases, we will have to sit tight for a while longer until the UK government, or UK-EU negotiations, provides some clarity on such issues. So what should energy and environment managers do in the short term?
Firstly, they can help their organisations build resilience against the inevitable uncertainties, by increasing cash reserves and reducing unnecessary expenditure. Secondly, they can keep a watching brief on the organisation’s regulatory responsibilities as negotiations unfold, and be ready to respond with agility. Here’s how:
Understand your business continuity arrangements
Grid operating reserves are at a ten-year low, and the network is scrambling to adjust to a new flexible, decentralised generation model. In the meantime, the planned closure of unabated coal plants by 2023, delays in securing investment for new nuclear plant, and uncertainty over how the continental interconnectors will be operated, all suggest that energy security should move up the agenda.
Check that your organisation’s backup generators or UPS units are up to the job. If you are thinking of installing additional storage or generating capacity on site, consider using these reserves to help balance the grid, creating additional revenue streams for your business.
Recession-proof your business
The Bank of England and the IMF both agree that a recession is likely, so reducing operating costs is a wise move. If you don’t know where your energy is going, get an audit to map the hotspots. First, consider where you can reduce demand: pumps and drives are easy targets. Retire your older servers, maximise free cooling and upgrade your lighting. Second, review your control strategies as this can substantially trim the costs of lighting, heating and cooling, and extraction fans.
Finally, map your new load profile to your current energy contract. Half-hourly settlement will replace Maximum Demand meters by April 2017, and if you haven’t previously been exposed to the time-critical nature of buying electricity, you may be in for a surprise. Check you are making the most of load-shifting to avoid peak tariffs and ensure your energy costs are in line with current market rates. It may be worth renegotiating contracts early.
Keep tracking your emissions
The UK’s carbon targets are driven locally via the Climate Change Act, and globally via the UNFCCC, so are unlikely to disappear altogether. The fate of EU ETS will depend on the emergent model of EU-UK relations. But CRC is still with us until 2019, and qualifying organisations must order their 2015-16 allowances before the end of July if they haven’t already done so.
Whether ESOS (or a derivative scheme) forms part of the regulatory landscape in future will depend on whether UK government continues to back the strong economic case for energy efficiency and stronger governance, or whether the urge for a “light touch” approach prevails. However it is likely that some form of energy or carbon reporting requirement will persist. By implementing a regular schedule of meter readings and audits, businesses can make sure they are well-placed to comply with future regulations while at the same time, taking advantage of the direct benefits of proactive energy management.