Small companies ‘kicked in teeth’ by UK energy policy

A lack of investment in new generating capacity could leave UK businesses at a competitive disadvantage as energy prices rise beyond those in competing economies.

Almost two thirds (62%) of energy experts quizzed in a survey for the Aldersgate Group expect the UK’s energy prices to be higher than competitor economies in 2015. Just 5% predicted lower prices.

The majority of experts (77%) also believe it will be higher prices for fossil fuels that will push energy costs up in the next couple of years, and not policies related to reducing carbon emissions.

Concerns over the replacement of decommissioned coal-fired power stations have been growing. Some argue for a greater focus on energy efficiency to reduce overall needs, but environmentalists told edie that confusion around UK energy policies has driven the big companies to invest elsewhere and “kicked the small companies in the teeth”.

Aldersgate executive director Andrew Raingold said rising energy costs were clearly a “major concern” for businesses and the cheapest way to address diminishing capacity and rising costs was to reduce demand. “There must be much more focus on incentivising consumers and businesses to use less energy rather than investing in expensive new supply,” he explained.

Philips Electronics senior director corporate communications Jayson Otke also urged policy makers to look beyond the challenge of limits to the UK’s energy capacity and tackle barriers to boosting energy efficiency. EDF Energy B2B energy services manager Laurent Mineau agreed, adding that improving energy efficiency “deserves greater attention in the UK energy debate”.

While green groups welcome the drive towards greater energy efficiency, some have warned that the UK cannot afford to ignore the long-term security provided by cleaner energy.

Iain Watt, principal sustainability advisor at Forum for the Future said the big energy companies have been turned off investing in the UK due to a number of policy “wobbles”. “These are pan-European companies. They have a distrust of the UK with the Government wobbling back and forth [on policy] and so have decided to invest elsewhere,” he told edie.

Watt highlighted the Feed-in tariffs as a high profile “wobble”, and a policy that could potentially have led to more investment and innovation from smaller players in the market.

“One of the nice things we thought about FiTs was the amount of entrepreneurship it could encourage. We could have had a future ‘Google’ of the energy world on our hands. Instead, small businesses have been kicked in the teeth by the new tariff.”

The survey also revealed that 94% of businesses would like to see major reforms of the CRC Energy Efficiency Scheme, but only 7% would like to see the scheme scrapped altogether. Some 86% would like to see mandatory carbon reporting, vindicating the announcement last month by the Deputy Prime Minister to introduce this measure, while only 23% of respondents thought that meeting regulatory requirements was a major opportunity for their organisation that helped to drive their energy strategy.

edie staff

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