Time to act on energy security

With energy prices continuing to soar, now is the time for businesses to ‘invest smart’ in decarbonisation as a route to ensuring energy resilience, says Darren Riva

 

This year has seen a perfect storm for energy prices, with the pressures on business reaching new heights. Indeed, research from the Confederation of British Industry (CBI) highlighted the extent to which businesses had become increasingly concerned about soaring energy costs, with 69 per cent of businesses expecting energy costs to increase over the next quarter – with almost a third anticipating rises in excess of 30 per cent.

The government has sought to help businesses weather the storm, most recently announcing its Energy Bill Relief Scheme, in order to protect them from rising energy costs for the next six months.

While the announcement has been welcomed with cautious optimism, the overarching sentiment is that the scheme only offers a temporary fix. Once the initial six-month period ends, the onus will be on all but the most vulnerable to protect themselves against energy prices, with demand reduction and investment in energy efficiency touted as the most likely solutions to combat future increases.

Energy prices aren’t the only challenge businesses have had to face. According to the Office for National Statistics, firms account for around 18 per cent of UK gas emissions and represent a critical piece of the UK’s net-zero puzzle.Therefore, the need for them to accelerate decarbonisation and to contribute towards both domestic and global climate reduction targets has also increased.

With this in mind, thequestion on many business leaders’ minds is how can they steer themselves through these challenges and protect themselves from energy price volatility, whilst also boosting their sustainability credentials?

Delivering energy resilience and decarbonisation requires investment in low carbon systems and cleaner technologies. However, financial hurdles remain one of the biggest barriers to positive change and more often than not, many businesses businesses will be put off taking the necessary steps that will improve their energy resilience due to a lack of access to investment funds.

The latest findings from the British Chambersof Commerce Quarterly Economic Survey (QES) for Q2 2022 shines a spotlight on the real reluctance from businesses to invest in plant, machinery or equipment at this point in time, with 73 per cent of firms reporting there was no change in this area, whilst indicators for investment have shown no sign of recovery since the start of the pandemic.

Equally, the CBI found energy price rises could stifle current or planned investment in energy efficiency or net zero measures.

With access to finance remains one of the biggest barriers to implementing positive change,businesses should be buoyed by the fact that help that is available. Given how dramatically energy requirements vary from organisation to organisation, it’s an area where there can never be a ‘one size fits all’ solution, and specialist guidance and support is essential.

As a specialist energy solutions financier, our entire focus is on supporting manufacturers to act on decarbonisation and energy resilience and security by providing bespoke energy finance, underpinned with deep domain expertise and knowledge. Through a host of funding options, we have helped companies in numerous sectors to accelerate their path to decarbonsation, reduce their energy bills, and reduce their reliance on the gird.

Our approach means we can encompass all aspects of a project, often with zero up-front capital investment required, allowing us to fund up to 100 per cent of the total cost of the project. Crucially, we deliver payment schemes aligned to an organisation’s energy strategy. This means that payments are calibrated according to projected energy savings, future budgets, government initiatives and company cash-flow. We can incorporate the cost of ongoing service and maintenance needs once a project reaches the operational phase to deliver a fixed cost solution.

It is vital to remember that not every change has to be complex or costly. We can provide finance solutions that support all types of energy resilience and decarbonisation measures – everything from replacing outdated lighting to the implementation of large-scale renewable solutions, EV infrastructures and distributed energy schemes.

Our results speak for themselves. To date, the projects we have funded are projected to save our customers more than £58m in energy costs and save an estimated 191,373 tonnes of carbon.

With global pressures adding to existing supply cost and decarbonisation challenges, this is now an ideal moment for manufacturers to achieve true energy resilience. In increasingly uncertain times, it really can make a world of difference.

 

• Darren Riva is chief executive officer of Capitas Finance

 

Sources

1 Confederation of British Industry

2 Department for Business, Energy & Industrial Strategy

3 Office for National Statistics

4 British Chambers of Commerce