Businesses need ‘carrot and stick’ to boost energy efficiency and drive down bills, Npower argues
The government needs to adopt a “carrot and stick” approach to energy efficiency, so that businesses can ramp up insulation to drive down bills and meet the UK’s net zero goals, argued the chief operating of a leading energy supplier.
Anthony Ainsworth, COO at Npower Business Solutions told City PM the government needs to provide businesses with policy certainty while also pushing firms to be greener.
This was especially important because 60 per cent of energy consumption came from businesses rather than households.
He said: “The carrot should be encouraging investment and policy needs to be for the longer with five to 10 years of certainty on what a policy regime will be – rather than changing from one budget to the next.
“Then, on the stick side – it’s about making it harder for businesses not to go green such as raising compliance thresholds and raising carbon targets.”
Chancellor Jeremy Hunt has pledged a further £6bn towards energy efficiency this decade on top of the incumbent £6.6bn insulation scheme, alongside a 15 per cent target for reducing energy usage – comparable to savings made on the continent last winter.
However, the focus has chiefly been on households, with businesses feeling bereft of information to boost efficiency and ease record bills.
“We’ve seen businesses really want to play their role, but they don’t think the longer-term energy policy is clear enough or pro-business enough yet. They want to see more encouragement for energy efficiency, for the government to starting to talk about flexibility and demand side response, alongside greater support for a shift to renewable electricity,” he explained.
The topic of energy efficiency is particularly timely, as Hunt opted against easing the reduction in business support – with the Energy Bills Relief Scheme set to be phased out next month for the Energy Bills Discount Scheme.
The new support package limits subsidies to 70 per cent of energy usage and is capped at £5.5bn over the proceeding 12 months – to lower the exposure the taxpayer is facing to high energy bills.
Ainsworth called on the government to closely review the scheme to “make sure it provides meaningful support while energy prices are still three times higher for businesses.”
Businesses are not sheltered by a price cap and have to buy energy on long-term contracts, with most companies not expected to feel the benefits of tumbling gas prices on the spot market until later this year when they sign new deals.
The Npower boss was speaking to City PM ahead of the publication of its latest business tracker, which polls medium and large-scale businesses – the bulk of Npower’s customers.
It revealed that 91 per cent of businesses say that energy bills is a board level concern.
That is up from 80 per cent this time last year, with the topic becoming the top business risk for two-thirds of larger companies.
Three quarters of surveyed businesses also believe the the Energy Bills Discount Scheme – due to come into force on 1 April 2023 – won’t go far enough to support them, and less than half (44 per cent) of businesses believe the energy crisis will help the UK progress to net zero.
The government has been approached for comment.