Ian Gadsby, managing director, Ylem Energy, said:
The announcements made today in the Autumn Statement confirmed that a reduced level of support with energy costs would continue for domestic customers after the end of March 2023, but while plans for targeted support for businesses in vulnerable sectors are set to go ahead, the announcements did not provide the clarity that many businesses now need urgently.
While the introduction of the Energy Relief scheme was welcome news and went some way to addressing the serious difficulties that many businesses are facing, most will have continued to pay significantly more than the headline figure of 21p per kWh which was based on the wholesale price of electricity.
Now, with just over four months until the scheme ends, there is a very real cliff edge approaching. Energy costs are set to remain volatile with significant uncertainty extending well into 2023 and quite possibly beyond.
It is imperative therefore that businesses act now to develop an energy strategy and look at measures such as installing solar panels and other onsite generation options. Such measures often take well over six months to deliver, so every day of delay is another day of avoidable and unpredictable costs.
The Government has also confirmed that a 45% Levy will be applied to revenues above £75 mWh that renewable energy generators receive from supplying energy into the wholesale market.
This Levy has the potential to raise circa 14bn for the Treasury which will help balance the UK books, however this will do little to help the cost of energy to end users, with electricity from the national grid remaining substantially reliant on natural gas fuelled generation (typically 50% of production).
In times of low renewables production, the reliance on gas derived power will be much higher which will result in significantly higher costs for grid supplied power at the very time when it is needed most.
Applying the Levy to the revenues of renewable generators will not translate into sustainable or meaningful savings for commercial and industrial consumers of grid power and may in fact reduce investment in new capacity which means progress toward a plentiful supply of renewable energy will be much slower.
