Andrew King, Founder of SGT
Andrew King is the founder of SGT, a Buckinghamshire-based business, helping organisations across the UK find commercial energy tariffs that meet their needs while keeping costs low. Heading into a new year, Andrew believes it is important to consider your energy finance situation and make smarter moves in the commercial world. Andrew discusses his advice to business leaders taking on the challenge.
The commercial energy world is a jungle. Energy prices go up, regulations change overnight, and everyone is pushing the “green” agenda. It is a lot to keep up with. But, if you’re not taking charge of your energy finance strategy, you are leaving money on the table – and nobody likes doing that.
Power Purchase Agreements
You’ve seen it – energy bills that make your accountant cry. And with all the geopolitical drama and supply chain headaches, those bills are not getting smaller anytime soon. The smart players are locking in their rates with Power Purchase Agreements (PPAs). These agreements are like saying, “Hey, I’ll take price certainty, please.” Plus, many PPAs give you access to renewable energy, which makes you look good to customers and regulators. In essence, a PPA is a long-term contract between an electricity generator and a buyer to secure the supply of renewable electricity at a predetermined price. PPA’s can last between five to 25 years, meaning they can weather the storm if the market rate spikes.
Upgrade Without Going Broke
Energy efficiency is the low-hanging fruit of cost savings. But here’s the catch – upgrading your equipment or building systems can feel like a mountain of upfront costs. Energy Performance Contracts (EPCs) offer an “act now, worry later” approach. The service provider designs and installs energy-saving measures and guarantees the savings. The organisation pays back the service provider over time with the savings. If the organisation saves less than promised, the service provider pays the difference.
Green loans often have lower interest rates and with an EPC, an energy service company does all the work and gets paid from the savings they create. You get the upgrades without touching your own wallet.
Make Your Own Energy
How about cutting out the middleman and generating your own power? Solar panels, wind turbines and even battery storage systems are all on the table. While this can be expensive, there are ways around that. Solar leasing, for example, lets you install solar panels for little to no upfront cost. You pay a fixed monthly fee that is usually less than your old energy bills. The government is also handing out tax breaks and grants for businesses willing to go green.
Get Smart About Carbon Credits
Carbon markets can feel like Monopoly money for grown-ups, but they are serious business. If you’ve got emissions to offset, you can buy credits. But here is the pro move: instead of spending cash on credits, invest in cutting your emissions. Carbon capture, low-carbon fuels, or energy-efficient systems are like hitting two birds with one stone – you save money and improve your sustainability.
Start With an Energy Audit
If you are serious about saving money, an energy audit is your best friend. Audits tell you where you are wasting money and how to fix it. Maybe it is as simple as using energy during off-peak hours or sealing up leaks. Quick wins like these can start saving money right away.
For bigger projects, an audit helps you figure out what gives the biggest bang for your buck. Maybe it is a CHP system or better insulation. Either way, you’re making informed decisions, not just guessing.
What’s New in Energy Finance?
Blockchain technology is shaking things up, letting businesses trade energy directly with each other. No middlemen, and no extra fees. And AI? It is like having a crystal ball for energy pricing and project planning. These tools give you the edge to stay ahead of the pack and should be utilised by all organisations.
The Bottom Line
Want to be the business that survives and thrives? Start thinking long-term. Educate your team, partner with experts, and keep an eye on market trends. It’s about being proactive, not reactive. The businesses that plan ahead are the ones that win big.
Energy finance isn’t rocket science. It’s about making smart moves that save money, keep you compliant, and make you look good doing it. With the right tools and strategies, you can turn energy from a cost into a competitive advantage. So, are you ready to take charge?
This article appeared in the Jan/Feb 2025 issue of Energy Manager magazine. Subscribe here.