Environmental taxes will make up a third of business energy bills by 2050

EXCLUSIVE: The proportion of a business' energy bill that comes from the energy itself will drop below 50% by 2050, according to an expert speaker at Sustanability Live.

Currently, the cost of wholesale electricity currently makes up 65% of an energy bill, but this will drop to 49% by 2050

Currently, the cost of wholesale electricity currently makes up 65% of an energy bill, but this will drop to 49% by 2050

Currently, the cost of wholesale electricity currently makes up 65% of an energy bill but, according to Gavin McCormick, the business development manager at energy consultancy EnergyQuote, this will drop to 49% by 2050.

In contrast, the proportion made up by environmental levies will more than double, from 14% to 30%.

The effect for energy managers could be stark, said McCormick, as the level of control they have over bills is diminished.

"We are firmly in the grip of low carbon transition, whether we like it or not." he said. "Energy is only going to get more expensive and compliance is only going to get more onerous."

Low-carbon impacts

The cost of the Government's Electricity Market Reform (EMR) landed on some electricity bills for the first time in April, undoubtedly prompting surprise for some, as around 15% of business weren't aware of the policy at all.

The Government's ESOS scheme is also widely regarded as hindrance rather than a help, with only 30% of energy managers surveyed by edie saying ESOS would help identify savings.

And the 'soft touch' of ESOS - which doesn't require companies to actually implement any efficiency measures - will soon be gone, according to McCormick.

"In the next five years we are going to have a big gap between where emissions targets say we should be and where we actually are. At that point the Government is going to insist on hard action".

Volatility

The transition to a low-carbon economy comes with considerable risks for energy supply, including traditional price volatility and supply volatility, for example when the wind stops blowing or the sun stops shining.

The best solution, according McCormick could be onsite generation, which insulates firms both from rsing environmental levies and price volatility.

McCormick was speaking at a session titled 'A holistic approach to sustainable energy procurement' in the Energy Efficiency Theatre at Sustainability Live 2015. The show is taking place this week (21-23 April). Register here.

Sustainability Live: Day One Highlights

Brad Allen


Tags

| EMR | energy bill | energy bills | esos | low carbon

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Energy efficiency & low-carbon
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