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Manufacturers urged to consider energy efficiency and low carbon heating

The spike in gas prices and associated knock-on effect on electricity costs has highlighted the need for companies to adopt energy efficiency measures to increase resilience and energy security.

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UK gas prices have quadrupled over the last year, rising 70 per cent rise in August alone, after a perfect storm of issues including rapidly rising demand from re-opening economies, limited supplies after a cold winter and unexpected power plant outages.

Low wind speeds in the UK over summer have also meant a shortfall of renewable energy on the grid that had to be made up by more gas power generation.

The UK is particularly exposed to price spikes than other countries because gas plays such an important role in heating, industrial processes and power.

The impact is already being felt by power-hungry industries such as steel. Steelmakers have reported facing energy prices in the thousands per megawatt hour, compared to roughly £50 per megawatt hour this time last year. 

Stephen Phipson, CEO of Make UK, commented:

“Global gas supply shortages and the resulting energy price rises are already having a distinct impact on energy intensive industries such as steel, chemicals and automotive. When combined with inflation burdens, increased cost of raw material and wage pressures taken together with the challenges around HGV driver shortages, this creates a perfect storm which will impact on the much needed post-Covid recovery.”

Although the current crisis may be temporary, businesses are being urged to prepare for a future of consistently rising energy prices due to the UK’s changing energy mix and increasing demand from the electrification of vehicles and heating.

Craig Lucas, Energy Policy Panel Chair at the Institution of Engineering and Technology (IET), explained:

“We need to redouble our focus on the resilience of our own energy system. In the next few years, we will be retiring much of the generation capacity which can balance periods of low wind (coal and nuclear) on the tacit assumption that gas-fired generation can provide the flexibility we need as we transition to a Net Zero energy system.

“The recent combination of electrical plant outages and gas price spikes is arguably a ‘black swan’ situation, but we must plan for a more uncertain future. This situation only underlines the urgency of progressing measures like energy efficiency and low carbon heating with more vigour.”

Greater Manchester manufacturers can access fully-funded support on energy efficiency from the Hub’s specialist Resource Efficiency Service.

The Hub’s online Journey to Net Zero programme is also designed to help businesses learn to use use energy more intelligently as part of their strategy to reduce carbon emissions.

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