Are your Business' Electricity costs fixed? No,they definitely are not!
There is an opportunity for those who manage their Energy consumption during this COVID-19 lockdown. Businesses should continue to keep their energy consumption in check. There will be some opportunities to realise the effects of decreased consumption on your Electricity Bill. Particularly the Tariff you are being charged, and if you are still being charged Maximum Demand charges even though your Business is closed. We are Archon are Experts in Tariff Studies and can motivate Tariff Changes with Council based on your Profile. Let us have a look and you will be surprised as to what is achievable!
There has been a significant drop in the Electricity consumption on the National Grid since the lockdown started on 26th March. This time, the disruption is on the Demand side – the energy is still available, but the demand for it has reduced. With most shops, factories and offices closed or under severe restrictions, we at Archon expect the electrical demand of a normal working day to continue to be closer to that of a weekend or bank holiday. Typically, there is a 10-20% drop between a weekday and a weekend day, depending on the time of year.
The last time global demand was this low for the month of March was back in 1970’s, a further indication of how the Coronavirus measures are changing people’s routines, and the energy they use to underpin these. April is likely to be lower still, taking electrical demand back to the 1960s, to a period before daily data became available.
With many people working from home and schools shut, people are less governed by routines and strict adherence to times for commuting or the school run. This has caused the typical morning electricity “peak” to flatten out, as electrical showers, kettles, lights and heating are spread over a slightly longer period. Something similar happens on Sunday mornings, and in particular on Christmas day and New Year’s Day.
We are also keen to observe how much increased digital traffic will increase the load on the electrical system. As most face-to-face meetings have now effectively stopped, various conversations, meetings and indeed lessons are now taking place online or over the phone. Domestic WiFi use is skyrocketing as people stay in and ISPs remove limits on broadband data, causing an unprecedented strain on data centres across the world.
An overall drop in energy demand should also mean a proportionate decrease in emissions, particularly as people use a lot less petrol, diesel and aviation fuel. The reduction in plane and car travel is expected to significantly lower of carbon emissions in April, even when considering the increase in online delivery services for food and other necessities.
Less electrical demand also means coal and some gas power plants can be turned down or switched off, and a greater proportion of demand can be met with low-carbon generation. Therefore, we expect a decrease in grid carbon intensity (a measure of how much carbon goes into producing a unit of energy). However, this is dependent on the weather – if there’s no wind or sun, fossil fuel generation is needed to meet demand.
It is clear that measures to control the spread of the Coronavirus are already having significant effects on Global energy systems. But we don’t yet know how long these measures will last, and how quickly demand will bounce back to pre-COVID-19 levels. It may even be that overall energy demand will rebound back even further to take advantage of cheaper fossil fuels, thus bucking the trend of extraordinary reductions in energy use and carbon intensity over the past decade.
Archon urges Businesses to inspect their tariffs (or let us look at it for you) and look at both the fixed and the variable charges. As much as 10% of your total operational costs can be attributed to Energy. By making sure you are not being over-billed on your Utilities, you can prevent wasted costs that will have an immediate effect on your profit.
The lockdown period speaks to us all about categorising cost centres and reducing utility costs on all fronts where possible and running these operations and costs effectively as possible. Electricity and Energy is a high component in most income statements.
Now is the best time to evaluate, scrutinise and investigate your Energy costs since business is winding down and has ceased on an enormously large scale. Businesses often tend to treat electricity bills as a given, like salaries and rental.
Rest assured that there will be more tariff increases looming in the near future and now is the perfect time to have Archon evaluate your consumption and make sure that you are being billed accordingly.