Business Energy Outlook 2024 & Smart Energy Management 

Business Energy Outlook 2024 & Smart Energy Management 

– By Media

April 23, 2024

Using Smart Technologies To Mitigate Business Energy Costs 

High volatility in the wholesale energy market has seen energy price increases and forecast price fluctuations into the end of the year and beyond. Energy is an unavoidable, major operational expense for every business. This makes optimising outputs and developing a smart energy management approach a strategic imperative to secure profits, assist with forecasting, and to meet environmental regulations and objectives. 

Understanding business energy pricing and the current outlook 

Factors affecting short-term energy prices include higher than normal temperatures, high solar and wind outputs, high gas stocks, and increased French nuclear availability.  

In the long term, the volatility is ascribed primarily to questions around LNG availability and ongoing geopolitical factors. The latter is sensitive to the unfolding events in the Russian war on Ukraine, as well as potential escalation of Middle Eastern conflict.  

Other drivers include increased inflation in the United States, as well as the unexpected rise in German industrial production. There is also the risk of production cuts by OPEC, which would have the indirect effect of increasing the reliance on gas supplies owing to higher oil prices. This, in turn, has the potential to increase the gas price if these production cuts occur.  

Get to know your business energy bill costs and smart strategic focus points 

The wholesale energy price is only one component of your business’s final energy bill. For business customers, it’s important to turn your focus to the ancillary charges, which can account for the bulk of the expense to your business.  

Charge TypeOct-24Apr-25Oct-25Apr-26Oct-26Apr-27Oct-27Apr-28Oct-28Apr-29
Non Commodity Costs11.90311.90311.85111.85111.85111.85111.85111.85111.85111.851
Wholesale Price8.3977.5458.4316.7427.6196.9057.855.9177.75.116
Industry Administration Charges1.
5 Year p/kWh Forecast

Non-commodity costs are a range of government-imposed and third-party fees and can amount to 60% of what you ultimately pay on your electricity bill and around 45% of your spend for gas. These are usually fixed charges and are subject to increase over time. These charges may be used for network and infrastructure.  

However, in recent years, the rising costs around government schemes and levies accounts for the most noteworthy increases. This is connected to energy and carbon reduction obligations, which ultimately affect consumers. 

During this time of volatility, the best approach to manage energy costs is to turn your attention to non-commodity costs. In this regard – broadly speaking – reducing your energy consumption and optimised, smart business energy management should be on the priority list of every business. This allows for more controlled costs and savings, flexibility and resilience in response to market changes, and improved ESG and environmental profiles.  

Below we look at some key ancillary charges and outline some of the ways you can save by being smarter about business energy. 

Infrastructure Costs 

Standing charges are daily charges added to bills regardless of consumption and to cover network, maintenance, and connection expenses.  

The infrastructure and transmission of energy is facing upgrades to meet net-zero emissions objectives. This means price escalations. The best way to mitigate these costs is to strategise consumption around peak usage. To achieve this and minimise disruption, it’s essential to understand your business’s detailed energy consumption.  

Our smart metering solutions and SmarterView cloud-based dashboard provide real-time data insights, intelligent reporting, and automation capabilities for seamless integration of smart energy management strategies. These easily-deployed, affordable solutions make the move to smart energy monitoring and management an essential first step in digital transformation for energy management.  

By understanding your energy consumption, you’re also best-placed to plan the shift to renewable energy sources. Using SmarterView, you get real-time insights on renewable power generation and grid offset levels, ensuring consistent performance and a hassle-free green energy plan.  

Green Levies 

To meet climate change obligations, the move towards renewables is a priority for governments and businesses. The green levies imposed by government are passed on to energy suppliers which, in turn, form part of your business energy bills.  

Understanding these levies – and optimising energy efficiency – is already and will increasingly become a strong focal point for businesses in mitigating expenses on their energy bills. 

Climate Change Levy 

The Climate Change Levy imposes a tax on every kWh of energy used. Energy-intensive users qualify for exemptions of up to 90% if they meet certain energy consumption and emission reductions.  

Renewable Obligation Certificates 

These were designed to incentivise investment in renewable energy. Suppliers are required to evidence increased use of renewable energy sources. ROC-related costs are passed on from suppliers to customers and have seen steep price hikes in recent years.  

Energy-intensive businesses qualify for an up to 85% exemption. 

Feed-In Tariff 

The Feed-In Tariff was designed to encourage small-scale adoption of renewables among consumers. The cost of implementing this is through a fee on your energy bill. Under the Feed-In Tariff, consumers are paid for every unit generated by renewable sources and pays for units exported to the grid.  

Energy-intensive business consumers qualify for an 85% reduction. While subsidies continue, the scheme has been replaced by Smart Export Guarantee, which requires suppliers to provide a special tariff to small-scale consumers who are generating renewable energy.  

Capacity Market Levy 

Implemented through the Electricity Market Reform legislation, this levy was implemented to safeguard supply as environmental changes were implemented. The cost of managing these processes is covered by the levy.  

This charge comprises an administrative element and a charge passed on to suppliers for consumption during peak periods. This is then added to your energy bill based on consumption estimates during these peak periods.  

Contracts For Difference 

This was designed as a replacement for Renewable Obligation Certificates. With regard to wholesale prices, the scheme pays the difference between the wholesale price and the generated amount of renewable power.  

Smart Energy Management For Reduced Costs 

Precision energy management – backed by accurate consistent data – is essential to manage energy expenses today and into the future. Everything pivots on understanding consumption and planning around this. If you’re looking to understand consumption to work out whether to fix unit rates or exclude unit costs, the key is understanding your usage. If you want to reduce your peak usage, you’ll need to understand consumption to avoid disruptions. 

Ultimately, non-commodity prices are linked to consumption. For costs savings, to meet evolving environmental regulations, and to enhance your environmental policies, reducing energy consumption is essential for businesses.  

The smart energy solutions from Smarter Technologies Group provide real-time data insights to guide consumption and cost-cutting. Our SmarterView dashboard is user-friendly and remotely accessible, with configurable reporting based on your strategic focus points.  

By integrating smart metering solutions with smart building solutions, precision energy management is powered by monitoring key data metrics across critical assets and infrastructure. This creates scope for an holistic approach – from maintenance scheduling to occupancy monitoring and automated on/off functionality. The result is reduced waste and powerful strategic insights across even complex, multi-site operations.  

Contact Smarter Technologies to optimise your energy management approach today.  

Contact us today to see how Orion™ The Real-Time Data Network can benefit your business.

Our experts are on-hand to advise you on the most efficient and cost-effective smart technology solutions for your business’ needs.

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