How much should you add to your energy budgets for Electricity Market Reform?

The EMR will add at least 1p/kWH to your energy budgets by 2020. Althogh 1p/kWH is conservative & assumes that the proposed capacity mechanism will lower the wholesale market price (reducing the price rise impact of this 'pillar' of the EMR). If it doesn't you could easily be looking at a figure more like 2p/kWH.

What is already clear is that as the energy mix increases in complexity the required investment in infrastructure will increase the TNUOS and DUOS costs, such that they increase above the rate of inflation.

The energy mix has already changed significantly since 2010, when 67% of the total energy price was the wholesale energy price, to 60% in 2013. This will continue through to 2020 and the wholesale element will not go down but the amount of the total price it makes up will fall to less than 50%.

Considering all elements of your business energy bill and the current wholesale energy markets by 2020 it is realistic to be looking at an energy bill that is 60% higher than the bill you have to day.

This means that the obvious one of consuming less needs to be addressed by every business. Not only this but also how to take less from the grid, either by on-site intermitted power generation to support the grid or to reduce demand at peak usage times, or renewable on-site generation to support your demand and avoid carbon taxes on fuel source.

As the UK government reforms the generation mix in the UK and invests in it's infrastructure it is critical that your business does the same. Your business energy policy needs to maintain your competitive position and has to protect your profitability. For help building your energy policy speak to us at amber energy.

More on EMR, try DECC: