What does the UK energy crisis mean for your business?​

What does the UK energy crisis mean for your business?​

The UK energy crisis has been making headlines, and its effects over the coming weeks and months remain uncertain. There has been something of a perfect storm of factors around the world that has affected the UK particularly heavily.

The UK relies on fossil fuels for heating, cooking, manufacturing and much more, with around half the country’s power generated by gas-burning power plants. In recent months, this has become even more entrenched in the UK thanks in large part to three connected events.

Firstly, a group of the UK’s 15 nuclear reactor power plants have been forced to undergo maintenance as they age. Nuclear supplies approximately 21% of the UK’s energy, and compensation for that has been needed from other sources.

Simultaneously, the UK’s wind power has been less productive due to this being a less windy year than expected. In 2020, wind power accounted for just under a quarter of all electricity in the UK, but this year that has dropped to an estimated 7%. Wind technology is a powerful tool in the UK’s energy arsenal, but we are still in transition away from fossil fuels, and the reduced wind so far this year shows that further development of turbines and battery storage is required.

The third exacerbating factor in the UK energy shortage was a fire in the most important inter-connector power cable linking us to France. The fire halted a major source of energy imports from the continent and it is unlikely that they will be resumed until March 2022 at the earliest. Overnight, energy prices went up to £2,500/MWh, from an average level of £40/MWh that we saw in 2019 and 2020.

All of this led to the perfect conditions for a rise in gas prices to cause a serious energy crisis which is threatening to drag on into the coming winter. Gas supplies are low across Europe thanks to a lower level of supply from Russia. A warm summer meant that demand for more gas was not as high as in previous years during the summer months, so many did not realise that a problem was brewing.

Now, however, with the above factors all coming into play and winter around the corner, Russia’s Gazprom has refused to up its level of supply to the continent and the UK amid increasing demand, leading to a shortage and rapidly rising electricity prices. The prices have increased so quickly that many smaller energy firms are being pushed out of business and are likely to collapse

The aforementioned conditions are likely to cause hardship for people and businesses across the UK. Unless something unforeseen happens, costs are going to increase for businesses across the spectrum, from canning and packaging, to food production, to manufacturing, to offices and many more.

The temporarily increased reliance on fossil fuels may also have an impact on your Net Zero Carbon (NZC) targets and your ESG reporting for the year as your carbon footprint will naturally rise. For example, two coal plants – Drax in West Yorkshire and EDF’s facility in West Burton – are being paid a huge sum by the National Grid to ‘warm up’ production ahead of winter despite the fact that both are in the process of being decommissioned by the end of 2022.

What can businesses do to be more energy secure in future?

The businesses best able to weather the current storm and any future ones are those who take steps now to upgrade their premises into ‘smart buildings’.

A smart building uses technology to collect digital data surrounding a building’s performance and efficiency. This data and the subsequent controls that are installed enables the automation of various processes – from the control of heating and ventilation, lighting circuits, air conditioning and even safety and security.

The features of a smart building can be summed up as follows:

  • Connected systems

    All core systems within a smart building are totally connected and can be controlled via desktop or smart phone. This allows systems to communicate with one another and generate the data which enables you to make informed decisions.

  • Sensors

    Sensors are incorporated throughout the building to gather data about energy usage in systems like lighting, heating and cooling. Once you have this information you can:

    – Allocate your resources more effectively according to where they are actually needed
    – Reduce energy wastage across the board instantly
    – Cut your expenditure and start getting a return on investment straight away

  • Automation

    Once you have installed sensors and begun to gather real time data, you can begin using automation systems to control the entire building from your desktop via a cloud-based dashboard. These decisions are made within preagreed parameters and eliminate waste instantly.

The current UK energy crisis has highlighted the need for smart buildings more than ever, and emphasised that a responsible business can prepare for the future by using the latest technology.

IBG integrates all of your energy-saving technology onto one system and gives you an unprecedented level of control to begin cutting wastage and reducing your overheads instantly. Going green is not just preparing for a Net Zero Carbon future, it is an essential tool for the here and now.

By deploying smart, connected technology you can understand your energy usage and take the first steps to future-proofing your business and building against any future energy crises that may occur. Every business and every building will need to transition away from fossil fuels and the old ways of doing things – this is a fact. The only question is when this will happen, with early adopters in line for the most rewards.

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