What’s new with Energy Efficiency in UK’s small and medium-sized enterprises?

DEXMA carried out the following study in June 2015 focusing on the market feasibility in Spain, Italy and the UK. I will specifically pay attention to small and medium-sized enterprises (SMEs) established in the United Kingdom and their Energy Efficiency measures implemented, following a structure divided by 4 elements: Political factors, economic factors, social factors and technological factors.

UK has seen a gradual improvement in energy efficiency of approximately 25% over the period 1990-2010, illustrated by the overall ODEX index. This is due to improvements in all three sectors under consideration: industry, households and transport. However, this trend has continued after 2008 despite the economic downturn, which affected predominately energy intensive sectors such as heavy industry.

Political factors

UK has a well-developed policy landscape which covers the barriers to energy efficiency. Directly related to the Energy Efficiency Directive, the Government’s target is equivalent to achieving new energy savings each year from 1 January 2014 to 31 December 2020 of 1.5% of annual energy sales to final customers. The target has been set at 324 TWh.

3 policy measures have been identified to contribute towards the target: the Carbon Emissions Reduction Target (CERT); Community Energy Saving Programme (CESP) and Energy Company Obligation (CEO).

Some of the policies applied to existing energy efficiency schemes that require energy measures are listed as following:

  • Mandatory Greenhouse (GHG) reporting. From October 2013, all quoted companies are required to report and comment on their greenhouse gas emissions.
  • Climate Change Agreements (CCAs) provides energy-intensive industries with tax discounts in return for meeting energy efficiency targets.
  • Energy Performance Certificates. Introduced as part of the EU Energy Performance of Buildings Directive, it shows energy efficiency ratings of domestic and non-domestic buildings based on age, size and fabric of the building.

The framework of current policies represents a comprehensive package of measures, acting at all stages of the refurbishment cycle to overcome the key barriers.

Economic factors

The combined annual energy bill for small and medium enterprises in the United Kingdom is £3.5 billion. The average SME receives an electricity bill of over £2,500 per year and an average gas bill of around £3,200 while the average bill for a SME in manufacturing is £51,000 per year.

Energy use through lighting entails a significant proportion of SME energy consumption. It is known that SMEs could save up to £700 million by investment in lighting efficiency. Office equipment also plays a remarkable role in the energy consumption of this type of businesses.

Another interesting fact is that restaurants (with high ventilation requirements), workshops and public houses (which are found in the older buildings with limited scope for improvement) have the highest proportion of poor performing buildings.

Social factors

UK is situated among the Member States that has a medium progress in energy efficiency policies since the first NEEAPs (Northeast Energy Efficiency Partnerships). Opinions from the society on the ambition of the energy efficiency policy are divided: about half see a high ambition in a range of sectors, whereas the other half believes that the ambition is limited to a few sectors.

The rollout of smart meters into homes across Great Britain will present energy suppliers with an opportunity to engage their customers on energy efficiency. They are required to stick to an Installation Code of Practice when installing smart meters. This code compels suppliers to demonstrate the smart metering system and offer energy efficiency advice.

British government recognizes the vital role played by the local authorities in driving awareness to society and this is the reason why it launches fund to help local authorities to install and find energy efficiency home improvements.

Technological factors

Smart meters in households will remove the need for estimated billing, helping them to better manage their energy consumption, control and reduce their bills. Besides, they will facilitate faster switching between suppliers and drive a more competitive market, which will foster the development of new energy products and services.

It is estimated that by 2020 the average domestic household with both electricity and gas will save an average £23 per year on their bills.

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