npower’s latest annual energy report
of businesses sees energy risk
highlighted as their primary
business threat. So,how do those in
industry protect themselves against
the anticipated risks posed by energy
supply and costs? Wayne Mitchell,
interim industrial and commercial
markets director at npower, looks at what
the index unearthed and how selfgeneration
and demand management
technologies can play a central role in
energy risk management strategies

The annual npower Business Energy
Index (nBEI) canvasses the opinions
of businesses on energy-related issues.

With industry destined to play a big part in
helping to achieve the Government’s national
target of an 80% reduction in carbon emissions
by 2050, approaches to energy procurement
and management are of growing importance.

The number one risk highlighted by
respondents from major energy users (MEUs)
was ‘energy risk’ and, in particular, the risks
associated with supply and costs. Energy
outweighed all other more traditional
‘business’ risks including legislation, security
and health & safety. With such importance
being attached to energy, it is clear it needs to
be taken seriously at every level of an
organisation.

Security of supply and the
cost of energy are also set to
remain at the forefront of
business concerns for the
foreseeable future. Businesses
predicted that supply and
cost risk would still be the
major energy-related
concern in five years time –
continuing to rank higher
than areas such as energy
sources, legislative
compliance and associated
CO2 emissions.

Energy risk is growing in
importance, with 44% of
MEUs saying it has gained a higher profile
within their organisation over the past three
years. The increased awareness of energy risk
has prompted changes in how organisations
are managing energy. Improved monitoring
and reporting ws cited by 81%, and 85% said
it had led to improved energy efficiency
results. To support this move, 63% of MEUs
questioned said they now employed a person
specifically responsible for energy purchasing
and, of these, 14% are board members.With
significant operational risks concerning costs
and supply, we should expect to see this
number increase as time goes by.

However, one in six MEUs admits to
having no strategy to manage energy risk at
all. It appears that for some UK businesses,
energy concerns have yet to be turned into a
strategically-driven response. We would
encourage organisations to implement an
energy risk management strategy as soon as
possible to ensure they have maximum
protection.

Self-generation technology
Businesses can offset some of the risks
associated with long-term energy supply and
cost by implementing self generation
technology, for example, solar panels or
combined heat and power (CHP) and
utilising demand management tools. The
nBEI looked at this area for the first time this
year as we wanted to understand how
businesses were using the technology available
as part of their energy management plans.

For those who said they did not have self
generation technologies in place, the
respondents looked to the Government to
fund them, with 61% saying help should be
provided by way of Government grants.

Their least preferred option was a bank loan.

With 39% of MEUs and 61% of SMEs
admitting to having no current self generation
capability, it is clear that such moves to protect
the future position of the organisation are not
yet common place. It will be interesting to see
how this figure changes over the coming years,
especially as security and cost of energy supply
are set to remain at the top of the tree.

With a degree of reticence, it seems that for
some organisations, taking the step to ensure
their own future security of supply via self
generation is proving a difficult one to take.

MEUs keen to protect themselves from the
energy risks outlined in this year’s nBEI, will
need to seriously consider investigating the
options for self generation technologies and
demand management tools – to shield
themselves from the energy challenges of the
future.