Businesses could see their energy bills rise by up to 42% from 2011 to 2020, the government’s independent climate advisors have warned.
According to a report from the Committee on Climate Change (CCC), released on Thursday, businesses obliged to cut their emissions in the government’s Carbon Reduction Commitment scheme (CRC) will see their energy bills rise by 40%, while those not in the CRC scheme will see an increase of 42%.
The increase is largely a result of rising wholesale gas prices, but the government’s low carbon policies also play a part, accounting for a 25% and 26% portion of the increase for CRC and non-CRC businesses respectively.
Costs have already risen by an average of 92% between for non-CRC businesses and 110% for CRC businesses, between 2004 and 2011.
Those businesses which are entirely dependent on electricity to fulfil their energy needs are the most exposed, however. Electricity costs are projected to rise by over 50% (of which 35% accounts for low-carbon policies).
Energy broker Business Juice, which publishes a quarterly energy price forecast, said that price rises could be even higher than the CCC estimates.
“We’re forecasting a 6-8% rise in retail energy prices next year, which isn’t out of the ordinary, so when you start to factor in the impact of things like the Energy Bill, if anything a 40% rise by 2020 seems conservative,” Ashton Berkhauer, director at Business Juice, told Energy Demand.
But, on the bright side, the Climate Change Committee believes there is “significant scope” for businesses to shave 10% of their energy bills using energy efficiency measures.
Citing Marks and Spencers’ Plan A energy efficiency campaign as an example of how businesses can effectively deliver energy efficiency savings, the report calls on government to introduce stronger energy efficiency incentives.
“Opportunities to improve energy efficiency could offset at least part of the impact on commercial and industrial firms and all of the impact on households,” the report said. “However, stronger policies will be required if this potential is to be realised.”
Through the Plan A campaign, Marks and Spencer achieved its target of reducing its energy consumption by 25%, saving the company £22 million a year.
“Reducing demand to a lean level is vital for the long-term energy security of any business, given our current climate of rising prices and concerns about security of supply in the future,” said Berkhauer, adding that commercial enterprises looking to cut demand will need to make a significant investment in educating its staff.
“It’s important to get buy-in from senior staff if you need investment, but it’s also essential to make all staff aware of what you’re trying to achieve and get their support,” she said. “If everyone is on-side, trying to change their behaviour and keep a watchful eye for wastage and possible efficiencies you’ll see a much faster reduction in your energy consumption.”