UK Businesses Concerned by Energy Market Reform

THREE quarters of UK businesses are worried about the impact Electricity Market Reform (EMR) will have on their business according to new research by utility npower.

The Reform has been sparked by energy generating plant closures due over the next decade and hence the need for hefty capital investment of £110 billion to fill the energy shortfall through investment in new generation facilities.

The cost of energy, ability to forecast costs and impact on UK competitiveness topping their list of concerns. These findings are from new research by energy firm npower.

The main elements of EMR are Contracts for Difference (CfDs) and the Capacity Market (CM).

CfDs are intended to stimulate investment in low-carbon technologies including renewables, nuclear and Carbon Capture and Storage by providing predictable revenue streams that will encourage investment by reducing risks to investors and by making it easier and cheaper to secure finance.

CMs will help secure the UK’s energy supply by giving capacity providers financial incentives to provide reliable capacity, hopefully making sure the lights stay on at times of peak demand.

npower’s ‘EMR Pulse’, an online survey for business to comment on the EMR, reveals that businesses have concerns about how EMR will impact them, with cost at the forefront of their mind.

Nearly all businesses (97%) are worried about how the legislation will affect the cost of their energy and 91% are worried about the ability to forecast costs. Further to this and linked to financial concerns, 86% of businesses highlighted the impact on UK competitiveness as an area of uncertainty. 

Wayne Mitchell, npower's Industrial & Commercial Sales & Marketing Director, said: “From our ongoing dialogue with major energy users, we know businesses are concerned and confused about the impact EMR will have on their operations but it’s been really eye-opening to uncover exactly what these concerns centre on. It’s no surprise, in the light of economic challenges, that cost implications top the list. It is, however, revealing that businesses are worried about the impact on UK competitiveness, as the last thing Government will want is businesses moving abroad as a way around EMR.

“What is concerning is that 15% of businesses have no awareness of EMR at all, or don’t think it will impact them. That’s why at npower we are working to help educate businesses on EMR and how it will affect them but also to help energy managers understand that while they don’t have direct control over energy legislation, they can mitigate its impact by taking firm control of energy purchasing and management to manage costs.”

Picture of Heysham Nuclear Power Station by Rwendland (Own work) [CC-BY-SA-3.0 or GFDL], via Wikimedia Commons

Thursday 5th September 2013

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