Bringing power in-house

Posted on 9 Nov 2011 by Tim Brown

npower’s latest annual energy report sees energy risk highlighted as the primary business threat. But for manufacturers looking to protect themselves against the anticipated risks posed by security of supply, a number of questions with regard to power self generation and demand management technologies remain – including who should pay for them?

The annual npower Business Energy Index (nBEI) canvasses the opinions of businesses on energy-related issues. With the manufacturing industry destined to play a big part in helping to achieve the Government’s national target of an 80% reduction in carbon emissions by 2050, its approach to energy procurement and management is one of growing importance.

The number one threat highlighted by respondents from major energy users (MEUs) was energy risk and, in particular, the risks associated with supply and costs. Energy outweighed all other more traditional business risks including legislation, security and health and safety. With such importance being attached to it, it is clear energy needs to be taken seriously at every level of an organisation.

Security of supply and the cost of energy are also set to remain at the forefront of business concerns for the foreseeable future. Businesses predicted that supply and cost risk would still be the major energy-related concern in five years time – continuing to rank higher than areas such as energy sources, legislative compliance and associated CO2 emissions.


“Businesses predicted that supply and cost risk would still be the major energyrelated concern in five years time – continuing to rank higher than areas such as energy sources, legislative compliance and associated CO2 emissions.” Wayne Mitchell, interim industrial and commercial markets director, npower

Energy risk is growing in importance, with 44% of MEUs saying it has gained a higher profile within their organisation over the past three years. The increased awareness of energy risk has brought about encouraging changes in how organisations are managing energy. Eighty one per cent stated it had led to improved monitoring and reporting, and 85% said it had led to improved energy efficiency results. To support this move, 63% of MEUs questioned said they now employ a person specifically responsible for energy purchasing and 14% of these are board members.

With significant operational risks concerning costs and supply, we should expect to see this number increase as time goes by.

However, one in six MEUs admits to having no strategy to manage energy risk at all.

It appears that for some UK businesses, energy concerns have yet to be turned into a strategically-driven response. We would encourage organisations to implement an energy risk management strategy as soon as possible to ensure they have maximum protection.

Businesses can offset some of the risks associated with long-term energy supply and cost by implementing self generation technology, for example, solar panels or combined heat and power (CHP) and utilising demand management tools. The nBEI looked at this area for the first time this year as we wanted to understand how businesses were using the technology available as part of their energy management plans.

With 39% of MEUs and 61% of SMEs admitting to having no current self generation capability, it is clear that such moves to protect the future position of the organisation are not yet common place. MEUs keen to protect themselves from the energy risks outlined in this year’s nBEI will need to seriously consider investigating the options for self generation technologies and demand management tools – to shield themselves from the energy challenges of the future.