Business Energy News - March 2015

Our pick of the most relevant energy political and market news items, updated every month.

E.ON Budget Briefing 2015

The Chancellor of the Exchequer, George Osborne, has delivered his last Budget before the general election, giving a hint at what policy a future Conservative government would pursue.

The main headlines focused around tax and du­ties – personal allowances will rise incrementally to £11,000 by 2017-18 and the 40p threshold will increase above inflation to £43,300 in the same period.

There were also cuts to taxes on alcohol, cigarettes and fuel, as well as a first time buyers’ ISA.

From a business energy perspective, there were few new announcements but we’ve outlined the main energy statements below as a guide.

Energy intensive industries

  • In the Budget of 2014 the Chancellor announced a package of reforms to reduce the energy costs faced by the most energy intensive manufacturers – around 80% of which are based in the North of England, Scotland and Wales – to ensure that they are as competitive as possible.
  •  In this year’s Budget he announced he would bring forward compensation for energy intensive industries – including compensation for the indirect costs of small-scale Feed-in Tariffs and the Renewables Obligation from 2016-17 (savings for energy intensive industries are predicted at £25million in 2015/2016).

Transmission

  • Off the back of the drive to reduce energy costs, the government plans to bring forward proposals for competitive tendering of onshore electricity transmission infrastruc­ture with the aim of reducing the cost of construction.

Renewables

  • The trailed announcement about proposals for a Tidal Lagoon in Swansea Bay was confirmed. The Government believes the technol­ogy could contribute up to 25TWh/year and has decided to enter in to the first phase of negotiations on a Contract for Difference to determine whether the project is affordable and provides value for money for consumers.

North Sea oil and gas

  • A number of measures were announced by the Chancellor designed to provide support to the sector following the dra­matic fall in oil prices over the last year.
  • The Petroleum Revenue tax will be cut from 50% to 35% next year and there will be a new single tax allowance to stimulate investment in the oil industry. In addition, the Supplementary Charge will fall from 30% to 20%, building on the 2% cut announced in the 2014 Autumn Statement.
  • The Government will invest in new seismic surveys in areas that have not yet been explored within the UK Continental Shelf.
  • The OBR estimates that the Government’s measures will provide a 15% boost in North Sea oil returns.

Petrol prices

  • The cost of a litre of petrol has fallen by around 19p since March 2014, meaning that the cost of filling the average tank has fallen by £11 since the last Budget. Despite the lessening pressure on the cost to families, the Chancellor chose to extend his freeze on fuel duty for another year.

Interconnectors

  • Following the decision to include interconnectors in the Capacity Market, National Grid has decided to invest in a new 1 Giga Watt electricity interconnector to Belgium, due to be operational by the end of 2018 with costs met by both developers.

Universities and Research

  • The government will invest an initial £60m in a proposal by six universities across the Midlands for a new Energy Research Accelerator, a major project to develop energy technologies of the future.

Other key points:

  • OBR growth forecasts – the fiscal watchdog said that the economy is growing faster than thought. Growth in 2015 is forecast up to 2.5% and in 2016 up from 2.2% to 2.3%
  • Employment – the OBR predicted that unemployment would be down to 5.3% this year.
  • Corporation tax - corporation tax will be cut to 20% from April 2015 and a comprehensive review of Business Rates is to take place, reporting in early 2016.

Top energy headlines 

National Grid seeks back-up power plants to keep lights on next winter

Emergency scheme to prevent blackouts was not needed this winter despite £30m cost, but will be scaled up for 2015-16 as power crunch worsens (telegraph.co.uk) Read Full Story

The Renewables Obligation (RO) buy-out price per Renewables Obligation Certificate(ROC)  is announced. (ofgem.gov.uk) Read Full Text 

Britain awards renewable subsidy contracts worth £315m – 27 Feb

Britain has awarded investment contracts worth more than £315m ($489 million) to 27 renewable energy projects in the first allocation round of its new contracts-for-difference (CfD) scheme.(reuters.com). Read Full Story

European energy regulations could be strengthened under commission plans

Proposals for new legislation on energy efficiency would be brought forward this October, but it could take years for any changes in directives to be enforced. (theguardian.com). Read Full Story

Market update

Market summary for February:

Gas: A mixed month saw prices outturn slightly up on last month.

Power: The power market continued to mimic the movements in gas.

Oil: The price of oil picked up.

Carbon: A month of both upwards and downwards pressure saw prices continue to edge up slightly.

For a detailed look at the energy markets for the past month, download our full report today.

E.ON Updates

Energy Saving Opportunity Scheme (ESOS)

Energy Saving Opportunity Scheme - E.ON

The Energy Saving Opportunity Scheme is a mandatory assessment scheme aimed at increasing energy efficiency for large organisations. Through our energy efficiency specialist company Matrix, who are working in partnership with Carbon Trust, we can now offer a full end to end ESOS solution from initial assessments and energy audits through to recommending potential efficiency savings. To find out more, download our factsheet.

E.ON leads by example - our energy efficiency case study

We have made significant progress improving the energy efficiency of our own sites. David Topping Director of Corporates for E.ON UK describes the various ways we have saved energy, cut costs and reduced the environmental impact of our business operations in UK.  To find out more download the case study.

Political briefing

TUC raise concerns over energy efficiency in businesses

A new TUC report claims that the government is saddling businesses with higher than necessary energy bills through its failing energy efficiency strategy for the commercial sector.

Efforts by government to boost commercial energy efficiency are not working, and end up costing UK businesses millions of pounds every year, says the TUC.

The TUC report Money to Burn details the need to improve energy efficiency in offices, supermarkets, hotels and other commercial businesses. The report makes a number of recommendations for UK commercial energy efficiency policy, with reference to best practice examples from Japan, Germany, the Netherlands and the US.

To improve non-domestic energy efficiency in the UK the report says that policy must focus on five different areas: regulation, tax incentives, access to finance, information gathering and dissemination, and ‘greening the workplace’ – with staff, unions and management working together.

TUC General Secretary Frances O’Grady said:

“Clamping down on the ‘Great British Energy Waste’ is a win-win for businesses, the government and the environment. Even small businesses can save far more from energy efficiency measures than switching suppliers.”