Understanding the risks
Non-commodity costs: an introduction
The obligatory charges, levies and taxes that cover the cost of running the UK’s gas and electricity networks have gone from making up just 25% of the energy bill in 2012, to accounting for the majority share of today’s business invoice. As Britain becomes more reliant on intermittent renewable generation over the next decade – making grid balancing a more challenging (and costly) task – the impact of these charges is only set to grow. As a result, it has become essential to have a clearer picture of your future energy costs and how this affects the different energy risks your organisation faces.
As the UK’s current reliance on gas imports and political instability amid Brexit leaves energy consumers vulnerable to market volatility, much more foreseeable risk has meanwhile arisen in the form of non-commodity costs.
Such is the impact of increased network and policy charges associated with Britain’s decarbonisation that these additional expenses are set to make up two thirds of the business energy bill by 2020.
The complexity of the electricity billing system is already estimated to bring about invoicing errors that cost British businesses more than half a billion pounds a year.
Meanwhile, the growing impact of non-commodity costs has not only seen average prices pushed up, but added yet further complication to invoices, thus compounding the risks related to billing.
Just as environmental sustainability becomes a global megatrend, at the same time, rising non-commodity costs (a direct impact of decarbonisation) are applying firmer pressure on business bottom lines. In reaction to these factors, organisations are quickly realising the benefits of practising better energy efficiency.
Demand for sustainability services are therefore growing at a rapid rate as a greater number of firms seek expert help in their energy saving, cost-cutting and environmental compliance.
One in three UK organisations cite financial concerns as a barrier to implementing energy-saving action. For those who can invest, there often remains a lack of resources or know-how to successfully realise energy reduction projects.
To overcome such common obstacles and achieve maximum benefit, businesses often require assistance - not just in the shape of expert consultancy and advice, but through the provision of financing options, project management and tailored energy solutions.
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Price Risk: How to counter rising energy costs?
How can UK businesses counter increasing energy price risk whilst also taking advantage of the opportunities that it presents?
Billing Risk: Are you being overcharged?
With one in five business energy invoices estimated to be processed incorrectly, the likelihood is yes -- and that can have a big impact your bottom line.