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Watch out for non-commodity costs in your energy bill

Network costs on energy bills are consistently rising year-on-year but businesses can mitigate these costs by being more flexible, which can be even more effective than cutting total energy use.

Network costs on energy bills are consistently rising year-on-year but businesses can mitigate these costs by being more flexible, which can be even more effective than cutting total energy use. 

According to utilities consultancy Inenco, in 2017/18 alone the various non-commodity costs on business energy bills such as network costs and environmental levies will add around £41/MWh to the average energy bill.

Without taking action to mitigate these rising costs, Inenco has calculated that most UK organisations can expect their energy costs to increase by 25 per cent by 2020.

Rising network costs

Network costs - the charges for using transmission and distribution networks on the energy grid - are increasing because network operators are having to make significant upgrades to ageing infrastructure.

These charges peak when energy demand across the network is highest, meaning that businesses can reduce the impact on their bill by shifting consumption to non-peak hours, reducing energy use altogether, or using energy that is generated or stored on-site.

This also helps to cut the environmental impact of the energy system by reducing the need for dirtier back up power plants needing to be switched on at peak times. 

 

Cheaper than energy efficiency?

According to Inenco’s research, shifting 50 per cent of consumption from peak red bands (typically 4-7pm) to amber bands (typically 9-4pm and 7-8.30pm) would have a bigger impact on energy bills than cutting energy consumption by ten per cent through energy efficiency. 

In light of this evidence, businesses should review their energy use and prioritise both energy efficiency improvements and exploring options to shift high energy using processes to non-peak times. 

Inenco has provided a free-to-use interactive ‘non-commodity cost dashboard’ that shows the make-up of your energy bill to 2019.