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26 | 13TH - 19TH FEBRUARY 2015 | UTILITY WEEK Customers Market view I f anyone had said a year ago that the oil price would be sub-$50 a barrel, even the brightest of energy analysts would proba- bly have laughed. Certainly Ed Miliband and his advisers could never have predicted that an energy price freeze would actually end up costing businesses and consumers money. Energy is a complex and fast-paced mar- ket at the best of times, but the unpredict- ability of the environment we currently find ourselves in is unprecedented. The result of the general election could mean very little change to the political land- scape, or it could lead to a major overhaul. If you throw in the growth of new technologies and environmental legislation, energy man- agers find they have many balls to juggle. So how do businesses best approach their energy strategy right now? At Utilyx we work with leading businesses across a number of sectors including retail, transport, telecom- munications, manufacturing and the pub- lic sector. At our recent customer seminar, I gained some interesting insight into how businesses were rising to the challenge and – as one leader said – "the opportunities". One point everyone agreed on was the value of certainty in an increasingly uncer- tain world. As one delegate put it, "price stability and certainty is more important than bottom fishing in response to market movements". It is clear that the focus of businesses has shied from energy prices and carbon to managing total energy costs and risks. Busi- nesses are juggling how best to buy energy, reduce demand and (if they can) control their own supply through on-site generation or power purchase agreements. Feeding into this is the need to better understand con- sumption through regular data monitoring and analysis, which enables businesses to identify where and how to most effectively reduce demand. There is also consensus that UK policy, which assumes a world of constrained sup- ply and rising prices, is no longer in line with the current energy climate. The massive growth of shale gas and liquefied natural gas availability, the crash in oil prices and reduc- ing demand from China, has suddenly taken us into a world of low energy prices. Busi- nesses are asking whether UK policy is the key driver of expensive energy bills and even whether the policies are still relevant. The issue of compliance is becoming more important, with a growing ra of environmental legislation to comply with. Some see schemes such as the Energy Sav- ings Opportunity Scheme as an opportunity rather than a burden. However, businesses are telling us that they need consistency across the range of schemes to ensure one scheme does not contradict, or duplicate, the scope of another. And what about carbon and the high cost of investment in renewables? The chang- ing landscape means that for some busi- nesses this becomes purely about reputation and compliance, whereas for others it has become less attractive if it is not about secu- rity of supply. Last year the energy agenda was domi- nated by rising prices and security of supply – today we live in a very different world, but what remains unchanged is busi- nesses' desire for a level of certainty in their approach to energy management. Those businesses that set their energy strategies for the long term will be in the best position to insulate themselves from short-term market movements, reduce their risks and maximise rewards. Jo Butlin, managing director, Utilyx Energy strategy The energy market is becoming ever harder to navigate for businesses trying to minimise their exposure to cost and risk. The oil price crash has simply added to the uncertainty, says Jo Butlin. The Energy Savings Opportunity Scheme (Esos) is a key element in the government's quest to find more and better ways of incentivising the shi to a low-carbon economy. Esos will affect any "large undertaking", defined here as a business with more than 250 employees. The regulation requires businesses that do not have an ISO 50001 accreditation to carry out an energy assessment of the energy used by their buildings, industrial processes and transport, and to identify cost-effective energy-saving actions. The assessment must be reported to the Environment Agency, which will set a deadline for the organisation to com- plete its identified energy-saving actions. Esos will work on a four-year regulatory cycle, beginning this December. Esos offers the potential for energy sup- pliers to develop a range of services and long-term partnerships with their commercial customers, helping them to comply and fulfil their obligations. However, to date, relatively few have tailored their commercial energy offer- ings to take account of Esos. This may prove a problem, given the rela- tively low level of awareness and confidence among key business groups to whom Esos applies, including manufacturers. Recent research by Npower, which claims to be "one of few suppliers with a portfolio to handle the entire journey for Esos", shows that: • while 60 per cent of British manufacturers have conducted their own energy efficiency assessments, 49 per cent say they aren't aware of the scheme and 69 per cent feel uninformed about its requirements; • a further 45 per cent say they are unpre- pared for the first of the government's Esos assessments, due December 2015. Richard Warren, senior energy and environ- ment policy adviser at manufacturers' organisa- tion EEF, says awareness and readiness for Esos is varied. "While many businesses are already well advanced on their energy efficiency journey, and will have already conducted much of work necessary for an Esos assessment, others will find the requirements a significant undertaking," he says. "With many organisa- tions only dimly aware of the scheme, it is imperative energy suppliers take steps to help their customers understand and comply with the scheme." EEF has produced a free guide on how to plan for the scheme and where to find further help and advice: www.eef.org.uk/esosguide Easing into Esos