ENERGY MANAGEMENT SPONSORED BY INENCO
contracted or bought volume and taking
mitigation against any over- or underhedges
in calculation.”
2Have the right procurement strategy “This
can either be done in-house or with an energy
consultancy,” explains Davidson. “Pricing has been
very competitive this year – we’ve seen a huge dip
in the market and, although prices have risen again
recently, we expect to see more opportunities in the
future. Smart companies will be forward buying while
the prices are low: buy now and secure a contract
until a set point in the future, rather than just seeing
how the market goes. It’s obviously important to
balance volume risk and price risk. The price risk is
the greater one but having the right procurement
strategy enables companies to find a good long-term
deal while managing volume on an ongoing basis.”
3 Get the right credit contract “You’ll need
a contract in place to take advantage of
procurement, but there are a couple of challenges
that can be mediated by having the right energy
consultant in place,” says Davidson. “The first issue
is around credit – suppliers are being more stringent
around who they give credit to. In this instance, it’s
important to build a relationship with your supplier.
Secondly, you need to be aware of the clauses
that suppliers have recently relied on to claw back
money. Choosing the right supplier isn’t just a
financial decision, but a contractual one: it’s vital
to understand the clauses in the contract that may
affect you. Previously, these wouldn’t need to have
been taken into account but in the current climate
it’s very important that they are understood properly.”
Buy better; use less
“In essence, energy management boils down to two
things,” says Davidson. “Buying better or using
less.” While this may be second nature for
some, many manufacturers – especially
SMEs – will not have the resources in place
to be able to stay on top of managing
their energy. However, there is an
incentive to doing so: Knott estimates
that “almost all organisations, through
a combination of people, process and
technology, can fairly easily reduce their
energy consumption by 5-10% without any
significant capital investment.”
There are several initiatives in place to help
manufacturers with this. Chief amongst these is the
recently extended CCA scheme. “The government
is due to announce new targets around
decarbonisation in the new year,” says Knott.
“We’re expecting them to be a lot tougher
and more ambitious than they currently
are. The government is providing tax
breaks for manufacturers but asking
manufacturers to do more to earn them.”
Other incentives include a £1 billion
public sector grant to reduce carbon
usage in supply chains, which will benefit
manufacturers, and Prince William’s
‘Earthshot Prize’, a Nobel Prize-style award for
environmental innovations over the next decade.
However, while the opportunities are numerous,
manufacturers risk missing out unless they have a
coherent strategy, says Knott. “We have run workshops
with all number of organisations, many of whom know
they need to do more and have lots of little initiatives
running, but there is very little central strategy to pull
it all together. Most companies want to do it not just
because their customers and employees want them to,
but because they believe having a sustainability strategy
will give them a competitive advantage in the next few
years. They feel that once they have a strategy in place,
they’ll be in a better position against their competition.”
Luckily, Inenco is here to help manage your
sustainability strategy as we enter the uncertain times
ahead. As well as workshops, Inenco offers a wealth of
expertise to help with any headaches manufacturers
may have, from developing a complete sustainability
strategy and incorporating it into the business to
offering advice around legislative change or the
growing plethora of taxes and levies applied to utility
usage; that can be both a risk and an opportunity.
For more information about how Inenco can
help you manage your energy strategy, visit
www.inenco.com
“Successful energy management boils down
to two things: buying better or using less.”
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