COMMENT : Brian Rickerby Joint Managing Director

Increasingly companies are asking themselves “ What is our Carbon Footprint?”
Understanding the impact we all make on the environment, and what practical steps we can take to reduce that impact, is an increasingly important question faced by the business market.

However, the reasons for this varies. Some take action from an environmental viewpoint, others to satisfy ‘corporate social responsibility’; whilst others are faced with formulating a plan to satisfy clients who are increasingly asking their suppliers to follow a ‘green’ agenda.

Whatever the motivation, reducing your carbon footprint by reducing energy consumption, (or even generating your own renewable energy) makes good business sense. However, we regularly encounter companies who are not fully aware of the practical steps they can take to reduce their carbon footprint’ as well as companies who produce corporate energy policies that are little more than ‘greenwashing’.

For example, in a recent survey we commissioned, 54 per cent of small to medium sized companies stated that solar panels were their renewable generation of choice, 44 per cent would opt for wind turbines and only 13 per cent stated a preference to generate heat and power from biomass.

Obviously the right solution varies from company to company, but generally the payback period on solar panels is the longest at approximately 15 years plus. Wind generation could be achieved with a payback around 5 years, with biomass often the most practical option.

Equally, these statistics do not correlate to the fact that the same survey revealed that 4 out of 10 companies would invest in renewable energy only if they could be sure of a payback within a year, with a further third only willing to invest if the payback period was within three years.

Education is plainly needed to show companies how they can formulate an effective action plan, pertinent to their own circumstances.

A guide to setting up an energy management policy can be found on our website or by clicking this link: http://www.energyteam.co.uk/info.htm

IMPENDING LEGISLATION FROM 06/04/2008 THAT COULD AFFECT YOU

Energy Performance Certificates are required for buildings constructed, leased or sold after this date. Display Energy Certificates must be displayed in public sector buildings from 06/04/2008. The following is a guide to this new legislation, who it affects, when and what needs to be done. We can ensure you are ready for this legislation. Please call us so we can help you.

DISPLAY ENERGY CERTIFICATES

WHO MUST HAVE THEM?

Public Authorities and any organisation providing a public service must comply with the Energy Performance of Buildings Directive requirement to prominently display a Display Energy Certificate.

BY WHEN MUST THIS HAPPEN?

From the 6th April 2008 every building with a total useful floor area greater than 1000m²(approx 11,000sq ft).

WHAT IS REQUIRED FOR COMPLIANCE?

Sites must display a Display Energy Certificate in a prominent place clearly visible to the public.

And have in their possession a valid Advisory Report for each of these buildings, which details recommendations to improve energy performance.

WHO CAN DELIVER THIS FOR PUBLIC AUTHORITIES?

An Energy Assessor, accredited to produce display energy certificates for that type of building, is the only person who can produce a Display Energy Certificate and the Advisory Report for these buildings.

HOW LONG IS A DISPLAY ENERGY CERTIFICTE VALID?

Display Energy Certificates must be renewed every 12 months. Advisory reports are valid for up to 7 years.

WHAT ARE THE PENALTIES FOR NON-COMPLIANCE?

The penalty is £500 for failing to display a Display Energy Certificate at all times in a prominent place clearly visible to the public in each building and £1,000 for failing to have possession of a valid advisory report at each building. In addition to these penalties, it is still necessary to commission the documents.

ENERGY PERFORMANCE CERTIFICATES

WHO MUST HAVE THEM?

The vendor in any commercial property transaction must comply with the Energy Performance of Buildings Directive.

BY WHEN MUST THIS HAPPEN?

From the 6th April 2008 every building with a total useful floor area greater than 500m²(approx 5,500 sq ft) and for all other commercial buildings below this threshold from 1st October 2008.

WHAT IS REQUIRED FOR COMPLIANCE?

Sites must have an Energy Performance Certificate. The certificate will provide a rating of the energy efficiency and carbon emissions of a building from A to G, where A is very efficient and G is very inefficient.

And have in their possession a valid Advisory Report for each of these buildings, which details recommendations to improve the energy rating of the building.

WHO CAN DELIVER THIS FOR VENDORS?

An Energy Assessor, accredited to produce Energy Performance Certificates for that type of building, is the only person who can produce an Energy Performance Certificate and the Advisory Report for these buildings.

HOW LONG IS A DISPLAY ENERGY CERTIFICTE VALID?

Energy Performance Certificates are valid for up to 10 years.

WHAT ARE THE PENALTIES FOR NON-COMPLIANCE?

Upon sale, lease or rent failure to provide a valid certificate will carry a penalty equal to 12.5% of the property’s rateable value (max £5,000). In addition to this penalty, it is still necessary to commission the documents.

FLEXIBLE CONTRACTS

In a response to an increasingly volatile market, suppliers are increasingly developing products that allow flexible contract purchasing. Whether purchasing electricity and/or gas on a flexible basis, (e.g. buying power on a monthly or seasonal basis to take advantage of the peaks and troughs of energy prices) is right for your organisation depends upon a number of factors, the biggest being your attitude to risk. If you are interested in learning more about flexible energy purchasing please contact us and we will be happy to discuss this in detail.

ENERGY SERVICES – OVERVIEW of SERVICES

energyTEAM can provide a full Energy Policy service including;

	Carbon Trust surveys and follow-up assessments
	Carbon Footprints (How to determine and reduce your carbon footprint)
	Help in the preparation of the Energy Policy
	Monitoring & Targeting
	Load Assessments
	Building Management Systems
	Project Management
	Climate Change Agreements
	Smart metering
	Relocation and reorganisation of processes
	Total Energy Management Agreement
	Energy Performance Certificates
	Display Energy Certificates

Electricity Market Overview

Following an erratic but steady decline in prices over the beginning of the last quarter, prices have been rising since the beginning of September (see graph below). This is due to reduced gas flows, tight generation capacity and financial players being very active in the market.

The increased price of coal, which is now in excess of $100/tonne, has also had an impact. (35% of UK electricity generation is coal-fired)

Baseload Electricity Prices (Graph)

Ofgem Approves Dutch Interconnector

Ofgem has issued a licence for a second electricity connector to mainland Europe. The link to the Netherlands is a joint venture by BritNed, a joint venture between National Grid Electricity Transmission and Tennet, the Dutch national transmission operator. The 260km high-voltage cable will link the Isle of Grain in Kent with Maaslavkte in the Netherlands. Work is due to start in spring 2008.

New Grid Connection Rules Proposed

Ofgem and the Department for Business Enterprise and Regulatory Reform (DBERR) have proposed changes to allow plant to get on line more quickly in return for disconnection from the grid when the system is congested. Currently new plant connection can only happen if there is capacity for all output to be exported at any time, which often involves costly and time-consuming grid reinforcement. The proposals in the new report ‘Ending Gridlock on the Grid’ by Ofgem and DBERR, proposes “flexible banking access products” that would allow developers to connect with a “less than firm grid connection offer”. Renewable generators argue that current connection requirements are not appropriate for generation that operates at full capacity for only short periods.

Poll Suggests Slightly More In Favour of Nuclear

The Government held daylong consultations in nine cities across the UK with a cross-section of UK citizens followed by a poll on their views on possible new-build nuclear programme. Full results of the poll have not been announced, but early indications suggest a slight balance in favour of the governments view that nuclear, “should be able to play a part in providing the energy we need to keep the lights on and cut emissions”.

Gas Market Overview

Gas prices have shown a similar, but not quite as marked, trend as electricity prices in that steady but erratic drops at the beginning of the quarter have been reversed with steady increases since the beginning of September (see graph below) due to reduced gas flows, tight generation capacity and financial players being very active in the market.

Wholesale Gas Prices (Graph)

Improved Gas Supply Outlook

A forecast by National Grid, published by Ofgem, says Britain will have access to 564million cubic meters of gas this winter. This is an increase of 73million cubic meters on last winter - a 15% increase. The extra gas will be coming from Norway’s Ormen Lange Field, following completion of the pipeline this month, and increased Liquefied Natural Gas deliveries once the Milford Haven terminal opens at the end of the year. On top of this extra storage capacity will be available, all of which will contribute to Britain being in a much more stable position from the winter of 2005-6 when questions on whether the “lights will go out” were raised in parliament.

Gazprom Acquires NGSS

The UK subsidiary of Gazprom has acquired the shipping company: Natural Gas Shipping Services. Gazprom Marketing and Trading Chief Executive, Vitaly Vasilev said the move would allow the UK subsidiary to grow its retail business by offering smart metering technology and flexible products.

Ofgem Approves NTS Reforms

The high-pressure National Transmission System (NTS) has had new arrangements allowing a capacity transfer mechanism between different entry points. Following the introduction of many new access points thanks to new liquefied natural gas (LNG) terminals and storage facilities, new and more flexible rules have become critically important. However Ofgem has stressed that Natural Grid Gas must come up with more lasting modifications for the future.

Oil Market Overview

Oil prices are heading towards $90 barrel, following growing unrest between Turkey and Kurdish militia in Northern Iraq, and OPEC indicating that it would not increase its production in the short term.
These short-term issues fall on the back of the fact that oil prices have been climbing steadily driven by continuing strong demand from the world's largest economies and concerns about production capacity. China's rapid economic expansion has contributed to the growth in demand for crude oil. From a low of $52 a barrel in January, oil prices have shown a steady upward trend with prices currently trading around $77 a barrel. The oil price boom has renewed interest in the energy sector amongst investors and speculative traders. They have become active players in the oil markets, raising non-commercial positions in futures contracts to record levels.

Oil Prices Brent Crude (Graph)

SOURCE: BBC News – Market Data

Opec Will Not Increase Production in the Short-term

OPEC said it was “concerned” by the rise in oil price, but blamed speculation, a weak dollar and geopolitical tension for the increase. Abdalla El-Bardi, Opec’s secretary-general said the crude oil market was “very well supplied”.

Oil Prices Could Hit Economic Forecasts

A year ago the economic forecast from the International Monetary Fund was basing its economic forecasts on an assumption that oil price would average $75 barrel this year. With the price rising to over $90 barrel, at some point the world’s economic ability to cope with higher and higher oil prices must be put into question. Currently European consumers are shielded by the high rates of tax on petrol, and the high value of the Euro, which makes the changes in the price paid less dramatic. Oil prices have jumped $11barrel since the spring, but in euro terms they are just €0.75 higher. US consumers have been shielded by the refiners not passing on the increases, absorbing the increase by sharply reducing their margins.

Coal Prices at Record High

Short-term prices for Coal broke above $110/tonne as shipping rates climbed higher in the face of intense global competition for vessels. The price of coal for the coming winter has topped $100/tonne.

'Green' Energy

Windfarm Endangers Golden Eagles

Emissions Levels Fall

Eon Acquires Dong Windfarms

Scottish Government Approves 213MW Windfarm

BT Plans Windfarms

BWEA Reports Planning Serious Risk to Green Energy

S D C Urges Energy Regulation Overhaul

EU May Scrap Fuel Subsidy

Helpful Guides

energyTEAM publish guides on:

	The Climate Change Levy
	How to Compile an Energy Management Policy
	A Guide to Smart Metering
	Weekly updates on Electricity and gas market conditions including wholesale gas and electricity graphs.

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