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Detective Work Uncovers P272 Advantages

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Revealed: the hidden benefits of pass-through contracts for businesses affected by P272. Sherlock Holmes says the world is full of obvious things that nobody ever observes – like the opportunity Utilitywise has uncovered simply by choosing the right tariff type.

It took some detective work but eventually cost-savings were dragged out of the complexity and confusion cast between pass-through tariffs and all-inclusive tariffs. Also known as a fixed tariff, this is the option energy suppliers are nudging their customers towards after P272 comes into effect on 1 April 2017.

But it may not be right for your business and could cost you cash you don’t need to spend.

P272 is a mandatory industry change made by Ofgem that affects meters in the 05 to 08 profile class (known as max demand meters). If your business has one or more of these meters, it must be reconfigured to a new way of billing called Half-Hourly (HH) settlement. You can read about how bills will change and its impact on business here.

Deducing the benefits

After switching, energy suppliers say all-inclusive deals are easier for firms to budget with. They are less vocal about the budgetary advantages of pass-through contracts.

Chris Toole, Market Segment Manager at Utilitywise, says: “Energy suppliers haven’t exactly hidden the benefits of pass-through contracts compared to an all-inclusive or fixed tariff, but neither have they made them entirely clear.

“The P272 changes are multiple and very complex, so it took us a while to realise that with a fixed contract you won’t be able to take advantage of load managing and the resulting savings you could make.”

Load managing means moving or lowering consumption at peak times. So a pass-through contract is the better option if your business can change working patterns. If you can shift opening hours from peak-time red (4pm-7pm), for example, to less expensive amber or green time bands (1pm-4pm), it would save you money.

Exploding the easy-to-budget myth

An all-inclusive contract looks good on the surface for budgeting energy spend. However, with HH billing you are billed for exactly what you use so the bill will vary each month anyway as consumption fluctuates, even just slightly. It means you can neither budget precisely every month nor do you have the potential to save through load managing.

Most suppliers have fixed and included third party costs like the DUoS charge – that’s the Distribution Use of System levied by Distribution Network Operators (DNOs) for using the National Grid – in the contract unit rate.

The DUoS has a published annual rate, which the DNO charges the supplier. It is then included in the overall unit rate within an all-inclusive contract. Even though the rate is fixed by the DNO some may see it as an opportunity to build in a margin to cover themselves for customers using energy at higher rate time-bands.

So if you shift your energy demand or load manage it away from peak times, you won’t get the benefit until you renew your contract and your DuOS charge is re-calculated and you’ll have spent a year giving the supplier money you didn’t have to.

For example, the DNO DUoS charge is 0.5p per kWh within the red band peak time. The supplier may charge 1p per kWh as a fixed charge within the overall unit rate as it has a 50% margin to cover itself from the customer using excessively in this expensive peak time. The customer then moves consumption to cheaper green peak time when the DNO actually charges 0.1p per kWh instead of 0.5p but they don’t benefit as they are on an all-inclusive tariff. The supplier, however, makes 0.9p profit instead of 0.5p.

Save immediately with a pass-through contract

A pass-through contract puts you in control and allows you to load manage to achieve an immediate impact on your costs.

These contracts are based on a fixed unit rate per KWh where third party costs are completely ‘passed through’ directly from the DNO. These include DUoS charges but also others known as TNUoS and BSUoS.

With a pass-through contract:

– The DNO passes actual DUoS charges directly to you, as a separate charge on your supplier bill with no margins added by the supplier. The charges show as an additional line on the supplier’s bill and are paid as part of that bill but at no more cost than the DNO charges

– You can take advantage of load managing and reduce third party costs within the lifetime of the existing contract.

The only disadvantage is the bill itself will be slightly more complex than a fixed-rate’s.

How Utilitywise can help

“If you can change your working patterns, our advice is to take a pass-through contract not an all-inclusive one,” says Chris.

The problem is that Utilitywise believes around 90% of suppliers are not offering pass-through contracts for those affected by P272. To adjust the balance, we have partnered with Engie, which will offer a one-year to a five-year contract that’s either fixed, pass-through or anything in between.

Chris adds: “The ability to determine whether it’s worth load shifting is to understand where you use energy. If you cannot move working times it’s probably not worth moving to a pass-through contract but you should at least have the option to choose rather than be driven down one path.”

To find out more, visit – www.utilitywise.com/products-services/procurement-and-tendering/p272/  call 0330 303 0233 (Small – Medium businesses) or 01527 511 700 (Large – Corporate).

Economy

New Zealand to Switch to Fully Renewable Energy by 2035

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renewable energy policy
Shutterstock Licensed Photo - By Eviart / https://www.shutterstock.com/g/adrian825

New Zealand’s prime minister-elect Jacinda Ardern is already taking steps towards reducing the country’s carbon footprint. She signed a coalition deal with NZ First in October, aiming to generate 100% of the country’s energy from renewable sources by 2035.

New Zealand is already one of the greenest countries in the world, sourcing over 80% of its energy for its 4.7 million people from renewable resources like hydroelectric, geothermal and wind. The majority of its electricity comes from hydro-power, which generated 60% of the country’s energy in 2016. Last winter, renewable generation peaked at 93%.

Now, Ardern is taking on the challenge of eliminating New Zealand’s remaining use of fossil fuels. One of the biggest obstacles will be filling in the gap left by hydropower sources during dry conditions. When lake levels drop, the country relies on gas and coal to provide energy. Eliminating fossil fuels will require finding an alternative source to avoid spikes in energy costs during droughts.

Business NZ’s executive director John Carnegie told Bloomberg he believes Ardern needs to balance her goals with affordability, stating, “It’s completely appropriate to have a focus on reducing carbon emissions, but there needs to be an open and transparent public conversation about the policies and how they are delivered.”

The coalition deal outlined a few steps towards achieving this, including investing more in solar, which currently only provides 0.1% of the country’s energy. Ardern’s plans also include switching the electricity grid to renewable energy, investing more funds into rail transport, and switching all government vehicles to green fuel within a decade.

Zero net emissions by 2050

Beyond powering the country’s electricity grid with 100% green energy, Ardern also wants to reach zero net emissions by 2050. This ambitious goal is very much in line with her focus on climate change throughout the course of her campaign. Environmental issues were one of her top priorities from the start, which increased her appeal with young voters and helped her become one of the youngest world leaders at only 37.

Reaching zero net emissions would require overcoming challenging issues like eliminating fossil fuels in vehicles. Ardern hasn’t outlined a plan for reaching this goal, but has suggested creating an independent commission to aid in the transition to a lower carbon economy.

She also set a goal of doubling the number of trees the country plants per year to 100 million, a goal she says is “absolutely achievable” using land that is marginal for farming animals.

Greenpeace New Zealand climate and energy campaigner Amanda Larsson believes that phasing out fossil fuels should be a priority for the new prime minister. She says that in order to reach zero net emissions, Ardern “must prioritize closing down coal, putting a moratorium on new fossil fuel plants, building more wind infrastructure, and opening the playing field for household and community solar.”

A worldwide shift to renewable energy

Addressing climate change is becoming more of a priority around the world and many governments are assessing how they can reduce their reliance on fossil fuels and switch to environmentally-friendly energy sources. Sustainable energy is becoming an increasingly profitable industry, giving companies more of an incentive to invest.

Ardern isn’t alone in her climate concerns, as other prominent world leaders like Justin Trudeau and Emmanuel Macron have made renewable energy a focus of their campaigns. She isn’t the first to set ambitious goals, either. Sweden and Norway share New Zealand’s goal of net zero emissions by 2045 and 2030, respectively.

Scotland already sources more than half of its electricity from renewable sources and aims to fully transition by 2020, while France announced plans in September to stop fossil fuel production by 2040. This would make it the first country to do so, and the first to end the sale of gasoline and diesel vehicles.

Many parts of the world still rely heavily on coal, but if these countries are successful in phasing out fossil fuels and transitioning to renewable resources, it could serve as a turning point. As other world leaders see that switching to sustainable energy is possible – and profitable – it could be the start of a worldwide shift towards environmentally-friendly energy.

Sources: https://www.bloomberg.com/news/articles/2017-11-06/green-dream-risks-energy-security-as-kiwis-aim-for-zero-carbon

https://www.reuters.com/article/us-france-hydrocarbons/france-plans-to-end-oil-and-gas-production-by-2040-idUSKCN1BH1AQ

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Energy

5 Easy Things You Can Do to Make Your Home More Sustainable

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sustainable homes
Shutterstock Licensed Photot - By Diyana Dimitrova

Increasing your home’s energy efficiency is one of the smartest moves you can make as a homeowner. It will lower your bills, increase the resale value of your property, and help minimize our planet’s fast-approaching climate crisis. While major home retrofits can seem daunting, there are plenty of quick and cost-effective ways to start reducing your carbon footprint today. Here are five easy projects to make your home more sustainable.

1. Weather stripping

If you’re looking to make your home more energy efficient, an energy audit is a highly recommended first step. This will reveal where your home is lacking in regards to sustainability suggests the best plan of attack.

Some form of weather stripping is nearly always advised because it is so easy and inexpensive yet can yield such transformative results. The audit will provide information about air leaks which you can couple with your own knowledge of your home’s ventilation needs to develop a strategic plan.

Make sure you choose the appropriate type of weather stripping for each location in your home. Areas that receive a lot of wear and tear, like popular doorways, are best served by slightly more expensive vinyl or metal options. Immobile cracks or infrequently opened windows can be treated with inexpensive foams or caulking. Depending on the age and quality of your home, the resulting energy savings can be as much as 20 percent.

2. Programmable thermostats

Programmable thermostats

Shutterstock Licensed Photo – By Olivier Le Moal

Programmable thermostats have tremendous potential to save money and minimize unnecessary energy usage. About 45 percent of a home’s energy is earmarked for heating and cooling needs with a large fraction of that wasted on unoccupied spaces. Programmable thermostats can automatically lower the heat overnight or shut off the air conditioning when you go to work.

Every degree Fahrenheit you lower the thermostat equates to 1 percent less energy use, which amounts to considerable savings over the course of a year. When used correctly, programmable thermostats reduce heating and cooling bills by 10 to 30 percent. Of course, the same result can be achieved by manually adjusting your thermostats to coincide with your activities, just make sure you remember to do it!

3. Low-flow water hardware

With the current focus on carbon emissions and climate change, we typically equate environmental stability to lower energy use, but fresh water shortage is an equal threat. Installing low-flow hardware for toilets and showers, particularly in drought prone areas, is an inexpensive and easy way to cut water consumption by 50 percent and save as much as $145 per year.

Older toilets use up to 6 gallons of water per flush, the equivalent of an astounding 20.1 gallons per person each day. This makes them the biggest consumer of indoor water. New low-flow toilets are standardized at 1.6 gallons per flush and can save more than 20,000 gallons a year in a 4-member household.

Similarly, low-flow shower heads can decrease water consumption by 40 percent or more while also lowering water heating bills and reducing CO2 emissions. Unlike early versions, new low-flow models are equipped with excellent pressure technology so your shower will be no less satisfying.

4. Energy efficient light bulbs

An average household dedicates about 5 percent of its energy use to lighting, but this value is dropping thanks to new lighting technology. Incandescent bulbs are quickly becoming a thing of the past. These inefficient light sources give off 90 percent of their energy as heat which is not only impractical from a lighting standpoint, but also raises energy bills even further during hot weather.

New LED and compact fluorescent options are far more efficient and longer lasting. Though the upfront costs are higher, the long term environmental and financial benefits are well worth it. Energy efficient light bulbs use as much as 80 percent less energy than traditional incandescent and last 3 to 25 times longer producing savings of about $6 per year per bulb.

5. Installing solar panels

Adding solar panels may not be the easiest, or least expensive, sustainability upgrade for your home, but it will certainly have the greatest impact on both your energy bills and your environmental footprint. Installing solar panels can run about $15,000 – $20,000 upfront, though a number of government incentives are bringing these numbers down. Alternatively, panels can also be leased for a much lower initial investment.

Once operational, a solar system saves about $600 per year over the course of its 25 to 30-year lifespan, and this figure will grow as energy prices rise. Solar installations require little to no maintenance and increase the value of your home.

From an environmental standpoint, the average five-kilowatt residential system can reduce household CO2 emissions by 15,000 pounds every year. Using your solar system to power an electric vehicle is the ultimate sustainable solution serving to reduce total CO2 emissions by as much as 70%!

These days, being environmentally responsible is the hallmark of a good global citizen and it need not require major sacrifices in regards to your lifestyle or your wallet. In fact, increasing your home’s sustainability is apt to make your residence more livable and save you money in the long run. The five projects listed here are just a few of the easy ways to reduce both your environmental footprint and your energy bills. So, give one or more of them a try; with a small budget and a little know-how, there is no reason you can’t start today.

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