Streamlining energy schemes would boost economy and incentivise businesses, says KPMG

The UK Government could achieve savings of £100m and improve private sector growth over the next 20 years if efforts are made to streamline administrative mechanics of energy schemes such as feed-in tariffs (FiT) and capacity markets, a new report has found.

The new report from accountants KPMG has argued that streamlining service delivery systems will help meet public sector financial needs while also decreasing regulatory burdens and red tape scenarios for the private sector.

KPMG’s director for power and utilities Robert Hull said: “The energy delivery landscape is likely to face many challenges in future years as Government policy continues to have to adapt to meet the challenges of security of supply, affordability and decarbonisation in the most efficient and effective way.

“Policy support costs are already significant and are growing – the choice of the future administrative delivery model is an important one.”

Highlighting the current financial insecurity surrounding the Brexit vote, the report notes that the government needs to identify potential saving options. According to the report, there are currently 30 operating bodies tasked with energy policy guidance and market administration, at the cost of £500m annually.

By streamlining services such as the Environment Agency, Ofgem and the Low Carbon Contracts Company with organisations operating in a similar sphere, KPMG anticipates cost reductions of around 20% over the next two decades, which equates to £100m.

The report – commissioned by service providers Gemserv – noted that around half of these organisations are involved with DECC and therefore establish overlapping and duplicate schemes within the energy efficiency sector. KPMG claims that this is having a detrimental effect on private sector growth and competition.

Business solutions

The report arrives on the same day that npower Business Solutions launched a survey revealing the attitudes of British businesses towards government plans to streamline the energy efficiency tax landscape by abolishing the CRC Energy Efficiency Scheme while increasing the Climate Change Levy (CCL).

A survey of 100 leading businesses revealed that the private sector views the scrapping of the CRC as a “key driver” for enhanced energy efficiency measures. However, 39% of respondents were unaware that further consultation is due later this summer, with the same percentage unwilling to participate in those discussions.

Around 66% of respondents agreed that the introduction of a single energy consumption tax would incentivise energy efficiency measures within the UK – with 88% claiming that the streamlining of the tax landscape would “keep them competitive”. Despite this, 97% feel that more needs to be done to reduce red tape burdens for business.

The head of npower Business Solutions – which has utilised ISO 50001 frameworks to create energy improvements – David Reed added: “We wouldn’t want to see companies unduly penalised for not receiving the help they need to better manage their energy use. 

“Transparent communication is vital here: clear energy reduction targets are important and we are supporting the requirement to make energy efficiency the starting point for regulatory reporting. But changes to the CCL’s rates will negatively impact business if firms aren’t fully aware that they need to prioritise energy efficiency.”

Matt Mace

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