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A quick word about the energy markets

In general, energy markets continued to show bullish behaviour through summer, but the recent trend has been slightly downwards.

The recent uplift in Covid cases has filtered through into commodity prices and demand has been falling in the UK. Although after an initial fall, oil is showing some signs of recovery.

Energy Supplier fall out continues

The ongoing whittling down of energy suppliers continues with the most high-profile being Bristol Energy falling to Yu Energy and Robin Hood Energy falling to British Gas.

A number of suppliers, who seem to be unable to fulfil their obligations to pay their Renewable Obligation fees, are close to the brink. Tonik Energy, Dual, Axis, Together and Effortless being amongst those that have sold up to competitors. It is to be hoped that this will help put off inexperienced entrepreneurs believing that the energy market is an easy place to earn a quick buck, though I guess that depends how much they paid themselves!

Regulation

It is never quiet in the world of regulation. The failure of so many suppliers causing significant pain for suppliers and customers alike, as the costs will have to be recovered through increased charges. These increases are likely to be compounded by other charge increases due to under recovery of other taxes and levies as demand is reduced.

Public Sector Decarbonisation Scheme

Beis has announced a new £1bn scheme, which will offer grants to the public sector via Salix. The scheme will also encourage green investment, supporting the Government’s Net Zero and clean growth goals.

The scheme will be available for capital energy efficiency and heat decarbonisation projects within public sector including central government departments and arm’s-length bodies in England.

On top of this, the Public Sector Low Carbon Skills Fund (referred to as the Low Carbon Skills Fund) is also available to source specialist and expert advice to identify and develop energy efficiency and low carbon heat upgrade projects for non-domestic buildings, before preparing robust and effective applications to the Grant Scheme.

Greenwashing – what is it?

Continuing the theme of sustainability from the last edition, many customers are becoming increasingly minded to ‘do the right thing’ and are seeking to demonstrate this by adopting so called green or eco-friendly products.

However, there are concerns that the increases in demand are leading to misleading or false claims.

For example, there has been a surge in the use of so-called second-hand renewable certificates, where the supplier trades the certificate without actually buying the energy. Some argue that this remains a valid approach to incentivising renewable energy but many see it as simply ‘greenwashing’, because in reality it adds no new value to the environmental mix of energy generation.

One of the key questions is that of ‘additionality’. This means that when buying energy via an eco-friendly tariff are you really supporting the development of renewable technologies or are you simply exploiting existing green certificated sources to give an impression of doing the right thing?

It is complex and there are of course many shades of green. For instance, do you consider nuclear power green, because there are no carbon emissions; or waste to energy green because it is not using fossil fuels; is on-shore wind less green than off-shore wind?

If you would like to know a bit more about what your business can do to help the environment, please contact us.


Article by: Chris Barrett

As seen in Issue 7 of The Bottom Line