Envantage Ltd has welcomed the moves by Ofgem, aimed at protecting small businesses and preventing poor practise by some energy firms. Does more need to be done for larger businesses?
Ofgem is to start working with Citizens Advice to help microbusinesses avoid bad energy deals, which have resulted in some charities, care homes and other smaller businesses paying as much as 50% commission on energy rates.
Under the new rules, which come into force later this year, all energy brokers will be forced to disclose how much commission they charge, and to offer a 14 day cooling-off period for new deals.
Who will be protected?
The regulations are aimed at microbusinesses, with Ofgem partnering with Citizens Advice to help make business owners more aware of their rights and the new regulations.
Envantage welcomes this move by Ofgem but Colin Hindmarsh, Envantage’s Managing Director, was keen to point out that the problem isn’t restricted to very small businesses: “While we’re very encouraged by the new rules and how they should protect microbusinesses, it’s important for larger businesses to be aware of the possibility that their energy broker may charge high commissions. Most energy brokers are honest, so if your broker isn’t disclosing how much you’re paying for their services up front, you have the right to ask.“
If you are unsure about your current energy deal, we can help to find out whether it’s the right deal for your business. Give Envantage’s experts a call on 0161 448 7722 or find our contact details here.
Businesses can claim 130% capital allowances on qualifying plant and machinery investments between April 2021 and March 2023, cutting taxes by up to 25p for every £1 spent.
In an effort to spur on business investment, which has fallen from already-low levels through the Covid pandemic, Rishi Sunak announced this £25bn measure of relief which it’s hoped will kick-start capital expenditure to boost UK productivity and international competitiveness.
Why is a super-deduction being introduced?
Business investment has fallen by 11.6% between Q3 2019 and Q3 2020, from levels which were already low. Our business investment in the UK can be traced as a reason for the productivity gap with our main international competitors, and productivity growth in the UK has been slower than in many other countries.
The super-deduction is aimed at giving a strong incentive to make additional investments and to bring planned investments forward. This should promote economic growth.
How does the super-deduction work for business?
The super-deduction offers 130% first-year relief on qualifying main rate plant and machinery investments from 1st April 2021 until 31st March 2023. For most business equipment this will mean that for every £100,000 spent the corporation tax deduction will be £130,000.
With corporation tax relief at 19%, that is £24,700 compared to £19,000 without the new scheme or 18% of the cost per annum. This incentive is a substantial increase for the two year period.
If your business is considering capital expenditure, either as part of a drive to improve energy efficiency or for any other reasons, the super-deduction may be the incentive you need to accelerate your investment.
If you are thinking about investigating energy-efficient investments, contact our team of experts by emailing email@example.com or call us on 0800 054 2577 today.
The Environment Agency has been issuing Enforcement Notices to businesses in the UK who are covered by the Energy Savings Opportunity Scheme (ESOS). At Envantage, we are helping some of these businesses to comply and to avoid the potential penalties.
What to do if you have received an ESOS Enforcement Notice
It’s essential to comply with any Enforcement Notice you have received. If you’re not sure exactly what you need to do, Envantage’s experts can help.
Envantage Ltd have been helping businesses across the UK t o comply with ESOS requriements, so talk to us today. We can help.
Our customers have never failed an audit.
“The project team were excellent, very knowledgeable and quickly understood our requirements and the industry we work in. The final report was extremely helpful for us as a business – offering practical recommendations for our business to roll out.”
Identify savings for your business by using ESOS to your advantage
Your ESOS Energy Audit is intended to identify savings opportunities for your organisation. Not only can you avoid penalty costs by complying, but your business can secure sustainable ongoing bottom-line improvements.
Savings from 10% to 30% are regularly identified, so work to comply now and secure cost savings in your business.
UK Chancellor Rishi Sunak presented his Budget for the UK finances yesterday and whilst the main focus of his plans centred around repairing the national finances in the midst of the Covid-19 pandemic, there were a number of notable announcements regarding the energy industry in general and the promotion of the UK’s green ambitions in particular ahead of the UK hosting the COP26 UN climate summit late in the year.
A commitment to green growth
Having stated that the budget would provide a “real commitment to green growth” which would help to build a strong, fair and resilient future economy, the Chancellor unveiled several new initiatives, including:
A National Investment Bank to be headquartered in Leeds with an initial capitalisation of £12bn dedicated to environmentally focused projects in both the public and private sectors to stimulate the green industrial revolution.
A world-first National Savings and Investment (NS&I) retail savings bond specifically for the UK public to invest directly in environmentally friendly projects.
The issue of £15 billion of green gilts in the next financial year to help finance critical projects which tackle climate change and other environmental challenges, fund important infrastructure investment, and create green jobs across the UK.
New “green” mandate for the Bank of England to reflect the importance of environmental sustainability and the UK’s transition to net zero.
£68 million to fund a UK-wide competition to deliver first-of-a-kind long-duration energy storage prototypes that will reduce the cost of net zero by storing excess low carbon energy over longer periods.
£20 million to fund a UK-wide competition to develop floating offshore wind demonstrators and help support the government’s aim to generate enough electricity from offshore wind to power every home by 2030.
£4.8 million to support the development of a demonstration green hydrogen hub in Anglesey.
£4 million for a biomass feedstocks programme in the UK to identify ways to increase the production of green energy crops and forest products that can be used for energy.
Continuation of the Carbon Price Support rate at £18t/CO2e for 2022/23 in addition to the commitment of a UK Emissions Trading System (UK ETS) later this year.
The Chancellor also announced additional support for the UK offshore renewables sector, with port facilities in the North East of England to receive infrastructure funding from Government to support the development of the offshore wind industry supply chain. Sunak stated that: “Offshore wind is an innovative industry where the UK already has a global, competitive advantage, so we’re funding new port infrastructure to build the next generation of offshore wind projects in Teesside and Humberside.”
Some critical voices
Critics of the Chancellor’s policy statement noted however that there was no mention of the government’s much vaunted £1.5bn Green Homes Grant which had only been launched last year but is to come to an end in March after only £94.1 million worth of grants were issued. Further criticism of the budget came after Sunak again announced the cancellation of fuel duty escalator for the 11th year running with environmental groups claiming that the UK’s climate emissions are up to 5% higher than they would have been had the escalator been maintained since 2010 at a cost to the Treasury of over £11bn for 2019/2020.
As part of the negotiated Withdrawal Agreement of the UK from the EU and as a means of enabling the UK’s net-zero carbon strategy until the middle of the century, the UK government has confirmed in this week’s White Paper that it will establish a UK Emissions Trading Scheme (UK ETS) from 1st January 2021 to replace the UK’s current participation in the EU ETS. The scheme has been designed by the Department for Business, Energy & Industrial Strategy (BEIS) to closely replicate the EU system that UK companies have been part of for almost 15 years and is intended to promote cost-effective decarbonisation by ensuring the emissions reduction goals of the UK’s carbon pricing policy are met without unduly damaging the competitiveness of UK businesses.
While we have a good level of detail published by BEIS this week, full guidance to advise businesses of their compliance obligations within the UK ETS will be released by the newly established UK ETS Authority in early 2021 alongside additional guidance for small and ultra-small emitters as well as a Hospital Opt-Out Scheme.
Which sectors are covered under UK ETS?
As with the EU scheme it replaces, the UK ETS will apply to energy intensive industries, the power generation sector and aviation. It will cover activities involving combustion of fuels in installations with a total rated thermal input exceeding 20MW (except in installations for the incineration of hazardous or municipal waste). The UK ETS will also include all UK domestic flights, flights between the UK and Gibraltar, and flights departing the UK to European Economic Area states conducted by all included aircraft operators, regardless of nationality. All businesses that carry out an activity covered by the UK ETS will need a greenhouse gas emissions permit and may also need a small emitter or hospital permit or an emissions monitoring plan.
Cap and Trade Methodology
The UK ETS will work on the ‘cap and trade’ principle as with the EU ETS, where a cap is set on the total amount of certain greenhouse gases that can be emitted by sectors covered by the scheme. This limits the total amount of carbon that can be emitted and, as it decreases over time, will therefore make a significant contribution to how the UK meets its Net Zero 2050 target. The scheme is designed to be more ambitious than the EU system it replaces as the cap on emissions allowed within the system will be reduced by 5% annually compared to the EU ETS annual reduction factor of 2.2%, with the cap starting at 155m tonnes in 2021 and falling to 117.5m tonnes by 2030.
Within this cap, participants receive free allowances and/or buy emission allowances at auction or on the secondary market which they can trade with other participants as needed. Each participant’s free allocation will be published in an allocation table soon after 1 January 2021. Stationary operators will also be required to submit verified Activity Level Reports by 30 June in 2021, and by 31 March each year after that. If data contained in these reports show an increase or decrease in activity of 15% or more, the operator’s free allocation will be recalculated in line with this change.
Emissions Trading Registry
As with the current EU ETS scheme, a UK Emissions Trading Registry has been developed for the UK ETS and participants require an Operator Holding Account (OHA) in the UK ETS Registry to acquire and surrender allowances in line with their obligations. Once a scheme participant has been issued a permit or emissions monitoring plan, the regulator will instruct the Registry Administrator to open an OHA on their behalf. They will then be contacted by the Registry Administrator and asked to provide details of a primary contact as well as authorised representatives to operate the OHA. Further information on onboarding will be provided in early 2021. It is this registry that will be used for businesses to submit UK Allowances (UKAs) ahead of the first compliance deadline in April 2022.
Auctions will continue to be the primary means of introducing allowances into the market and participants will also be able to trade UKAs on a secondary market, with confirmation this week that the Intercontinental Exchange (ICE Futures Europe) will provide the auction platform and secondary market services under the UK ETS until December 2022 with an auction calendar to be published early next year. Despite the scheme officially launching on the 1st January 2021, auctions for the UK ETS are not likely to commence until some point in the second quarter of 2021, although ICE is working to start auctions as soon as feasible subject to regulatory approval. Unlike the EU ETS, the UK ETS will have a £15 Auction Reserve Price which establishes a floor price for which allowances can be sold at auctions. In addition, there will also be a cost containment mechanism providing a mechanism for BEIS to manage any significant price spikes in the market.
EU ETS obligations for the 2020 scheme year
During the Brexit transition period from 1 February to 31 December 2020, the UK remains a full participant in the EU ETS. This means that all UK businesses that currently participate in the EU ETS must continue to comply with their EU ETS obligations for the 2020 scheme year. The deadlines for UK operators participating in the EU ETS during the transition period are:
31 March 2021 – submit Verified Annual Emissions Report for 2020 emissions
30 April 2021 – surrender equivalent allowances to 2020 verified emissions
Potential price implications for UK businesses
The UK ETS has been purposely designed to mimic the current EU carbon market it will replace to reduce the administrative burden on UK businesses. However, as the UK carbon market will be much smaller than its EU counterpart (covering just 155m tonnes of emissions p.a. in 2021 compared to the EU market of 1.57b tonnes), there is a significant risk of high volatility and price spikes in the early months of the scheme due to poor market liquidity. The delay to fully functioning auctions until Q2-21 could also lead to a significant supply-demand imbalance in the early months of the scheme. Some analysts also doubt whether financial players will be attracted to participate in the scheme given its smaller scope and artificial floor price mechanism curtailing speculative opportunities, further harming liquidity. In the long term, questions also remain as to whether the UK scheme will continue as a standalone market or seek to align itself with other global carbon markets as part of post-Brexit trade negotiations to ensure a level competitional playing field, be it the EU arrangement it replaces or similar carbon reduction schemes in the US or Asia.
Unsure of the impacts on your business?
If you would like more details or to discuss the effect of these changes on your operations, get in touch. Call 0800 054 2577, email firstname.lastname@example.org or use our Contact Us page.
Ofgem’s recently-announced Targeted Charging Review will change the way the electricity networks recover charges. The aim of the review is to spread the cost of maintaining the electricity grid more evenly across business and households, and to modernise the UK’s electricity network.
The changes will apply from 2022, which is earlier than many energy users were expecting, and might mean that changes to your electricity charging will affect how you plan your energy use.
What are the most important changes?
Triad charges will be replaced by a fixed charge system. This will be a more simple method of collecting residual charges for the energy sector overall, with a fixed charge, irrespective of business size or location.
This will be put in place from 1st April 2022, but it is recommended you review your load management strategy now.
How will this affect your energy charges?
How these changes affect your business depends on how you currently use electricity.
If you are a large energy user who has used load management to avoid Triad charges, you will not benefit from lower charges as a result of this any longer. Some large energy users who have used embedded generation to export electricity to the Grid during Triad periods will also lose the benefits that this has given in past years. In these cases, you are likely to see charges increase.
If, on the other hand, your business is a large energy user but is not able to load manage at Triad periods, your electricity costs may reduce thanks to the overall costs being more evenly spread amongst users.
Half-hourly metered supplies will be charged based on their Agreed Supply Capacity (ASC) and voltage level. Smaller business energy users, with no specific Agreed Supply Capacity (ASC), will join charging bands based on their volume of consumption.
What Should You Do To Prepare?
While the justification for load management is largely removed by these changes, it is important that your business understands how it will be affected.
If you have become used to reducing your load during times of peak demand, there is an opportunity to review your energy use and identify whether your site can operate more efficiently under the new arrangements.
The report looks at how effective energy audits and energy reporting have been, particularly relating to the ESOS scheme, and gives us some encouraging findings:
According to the research, significant measures taken by organisations to improve their efficiency have been associated with the ESOS scheme:
38% of all implemented or planned energy efficiency measures;
32% of all fuel efficiency measures;
1.65 TWh saved as a result of changes made to buildings;
0.52 TWh savings from fuel efficiency;
1.51 TWh savings from changes to industrial processes.
The study also found that ESOS had encouraged audits in many businesses for the first time, resulting in better data gathering, more discussion about opportunities and improved awareness of energy or fuel consumption and associated cost.
ESOS identified brand new energy saving opportunities for some audited businesses, and in other cases it gave better validation of efficiency measures that were already planned, making the audits more valuable.
According to the report, 37% of organisations said that ‘changes made as a result of ESOS had already led to net cost savings’. Increased staff productivity and reputational benefits were also attributed by businesses to the ESOS process.
What Should Your Company Do?
If your organisation has had a ESOS report, don’t limit your ESOS involvment to a regulatory box-ticking exercise. The recommendations in your ESOS report are aimed at reducing energy consumption, and that will save your business money.
Speak to Envantage Ltd about taking steps to reduce your energy consumption and improve your bottom line profitability.
The number of organisations affected by SECR is almost 12,000, compared to just 4,000 for CRC: You might be included in SECR even if you were never in CRC.
Qualification criteria have changed, so it’s important to check whether you are affected.
Are you captured by SECR?
All quoted companies (already covered by Mandatory Carbon Reporting, also known as Mandatory Greenhouse Gas Reporting) are required to report under SECR rules which have been altered from previous schemes.
Since April 2019 all unquoted companies and Limited Liability Partnerships (LLPs) which meet two of the following criteria are also obliged to comply:
At least 250 employees
Annual Turnover greater than £36 million
Annual Balance Sheet total greater than £18
If you’re already covered by Mandatory Carbon Reporting:
If so, from 1st April 2019 the requirements have changed. You will need to ensure that you know how this might affect your business. At Envantage we’re working with many large businesses to ensure that SECR does not interfere with business as usual.
If you’re new to SECR? (Mainly unquoted Companies and Partnerships):
Reporting Carbon Emissions may be new to you, but it‘s not new to us.
Here at Envantage we’ve been measuring greenhouse gas emissions for 14 years, working with companies, accountants and auditors since the inception of Mandatory Carbon Reporting to assure compliance for some of the largest business in the UK. Our experience is unrivalled, giving you peace of mind.
If you’re still unsure whether your organisation is affected, or if this is a surprise, contact us today to check the impact on you.
What will you have to do?
SECR came into force on 1st April 2019. In your first accounting period beginning after that date, you are obliged by the regulations to quantify your energy consumption from electricity, gases, and business transport. You will also be obliged to report energy against an intensity measurement and, after the first year, compare your performance with the previous year.
This information is required to be published in the Director’s report within your published accounts, for the transparent view of your stakeholders. You also need to publish narrative information about the energy efficiency measures you’ve taken during a reporting period.
Assuring your compliance
SECR is an important part of your obligations under the Companies Act 2006, and your published results can be subject to official audit by HMRC. Therefore it’s essential that you know the risks and ensure that your SECR compliance and reporting is in safe hands.
By choosing the right partner you can get on with your day job in the knowledge that your compliance is being dealt with professionally.
Can SECR be a benefit to you?
Although SECR is a mandatory scheme and there are strict rules to follow, it is aimed at reducing the carbon emissions of UK organisations. Embracing its values can be a benefit to you.
Publishing the required information helps your potential customers and your stakeholders to understand your approach to improving efficiency and sustainability, boosting your brand value. The information used in your submissions can also be invaluable in your marketing literature and tender processes, helping you to underline positive values and win more customers.
Many organisations also use the information required for mandatory submissions as a start point to measuring their own full Carbon Footprint. Why not take the next step and build a complete view of your Carbon impact? The brand benefits of this can be significant: ask us how we can help.
Is your organisation ready for SECR compliance?
SECR affects organisations from the first month of your first accounting year after 1st April 2019. It is not voluntary. Don’t leave things to the last minute.
If you qualify, you will need data collection routines in place to make sure you’re protected against the risks of non-compliance. As the 2019 accounting year progresses, help will become more scarce and expensive as experienced competent experts are in short supply. A managed process throughout your reporting year is the best approach to SECR. By being prepared and protected, you can avoid last-minute work and last-minute charges.
Envantage has a vastly experienced team and can also offer audit support: we’ve worked alongside auditors for many of our clients and will support you with HMRC if necessary, to provide the evidential records you will need in the event of any audit. You can rest assured that you have the right partners looking after you.
Do you have any questions? Protect yourself by asking now
Your Annual Report for financial years beginning on or after 1 April 2019 will need to contain your SECR information, so if you’re not certain what will be required, now is the time to check. Contact Envantage today to ensure that you’re going to be compliant – call free on 0800 054 577 or email email@example.com
Envantage has recruited two highly experienced Energy Consultants to add strength and depth to its Compliance and Sustainability services.
Russell Monkman joined us in 2018 and is already working with our clients to safeguard regulatory compliance and secure financial rewards. Russ has a vast experience of energy compliance and sustainability, both as an end-user and as a consultant working for businesses in a huge range of sectors.
Russ is a member of the Energy Institute, a Chartered Energy Manager and ESOS Lead Assessor, bringing a wealth of experience and technical knowledge to reinforce our growing team of energy and low carbon specialists.He also holds ISO 50001 Lead Auditor status.
In addition to his proven skills in the execution of ISO 50001 audits, Russ was shortlisted for the Industry Expert category at the 2018 TELCA awards. He has set up EU Emissions Trading Scheme permits, taken part in audits and to verify emissions and made submissions to ETSWAP for clients. He brings more than 30 years’ experience in carbon and energy management, compliance, technical services and the chemicals industry. Russ also has a degree in Electrical Engineering and is a respected and prolific speaker and blogger on a wide range of environmental and energy management topics.
Russ began dealing with energy in the Chemicals sector at Ciba Clayton, looking after their huge site just outside Manchester. Following that experience, he joined a local energy consultancy to help them broaden their energy offering. Since then, Russ has helped hundreds of organisations to obtain, maintain and protect compliance with the various energy schemes throughout the UK. He has also identified countless thousands in savings opportunities with his experienced, practical approach to spotting energy waste.
Michael Holness also brings a wealth of experience, gained in a number of consultancy roles with clients across a wide range of sectors. Mike joined Envantage in early 2019 after spending the last 15 years helping organisations to manage compliance and identify financial savings. Mike is also an ESOS Lead Assessor with the Energy Managers Association.
Mike has worked at major energy consultancy firms, delivering ESOS energy assessments and managing Climate Change Agreements for clients. He also has experience of relevant ISO schemes and the EU Emissions Trading Scheme, as well as implementing Automated Monitoring and Targeting on client sites.
Both Russ and Mike bring an enormous breadth and depth of experience to the Envantage team, enabling us to identify and secure savings for more clients and sites and to offer a more hands-on service to our existing customers.
Envantage was incorporated in April 2004 by experienced professionals within the energy supply industry with a vast knowledge of energy efficiency, energy legislation and energy procurement. We have developed our team over the years, building an impressive range of energy management and carbon reduction services. This has been achieved by recruiting highly capable experts in their related fields, like Russ and Mike.
Our stronger team can help your business to achieve more secure savings and to identify opportunities to spend less money on your energy. Contact Us Today for more details.