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The Energy Market in 2025 PASCHALi's Insight

Fri, 24 Jan 2025 15:14:18 GMT

PASCHALi closely monitors the UK’s energy market to ensure our clients stay ahead of energy trends and secure the most cost-effective energy deals. As we head into 2025, we outline our insights into the key developments likely to impact your business. They include:

Impacts of Renewable Energy: How developments in renewable energy sources may affect your business’s energy costs.

Geopolitical Impacts: Potential geopolitical shifts and their influence on energy pricing for your business.

Upcoming Legislation: Key legislation set to impact your energy supplies in 2025.

Money-Saving Opportunities: Recommendations for cost-saving initiatives to help your business reduce energy expenses in the year ahead.

Next Steps: Strategies for your business to successfully navigate the 2025 energy landscape.

Impacts of Renewable Energy

Overview

In 2024, the UK achieved its lowest carbon electricity generation to date, with renewable and nuclear sources accounting for 58% of the country's electricity (45% from renewables and 13% from nuclear). This milestone was further underscored by the closure of the UK's last coal-fired power station in September 2024, making the UK the first G7 nation to fully phase out coal power. These achievements align with the Labour Party's goal of attaining a 'clean power' grid by 2030, with wind and solar energy set to become the backbone of Britain's electricity system. Several large new offshore windfarms are due to open in 2025 and 2026 to support this change.

Impacts to Your Business

Short Term: Impacts of this renewable shift have already been evident in early January 2025. During this period, high electricity demand combined with low wind speeds (resulting in minimal wind energy generation) led to a higher reliance on gas power plants, which in turn caused a spike in energy prices. This trend of short-term price volatility is expected to continue until the UK further develops its battery storage and transmission infrastructure, leading to potential short-term increases in operating costs for businesses with high energy usage.

Long Term: As the UK increases its energy security and transitions to more renewable sources, the energy market will become less dependent on external factors, leading to more stable wholesale prices. This shift will benefit businesses as they will experience greater cost predictability and enhance their attractiveness to eco-conscious consumers .

Geopolitical Impacts

Overview

UK energy prices have been subject to significant volatility due to escalating geopolitical tensions and fluctuations in global energy supplies. While the ongoing Russia-Ukraine conflict is expected to have limited impact on the UK energy market in 2025 (given the UK’s reduced reliance on: Russian gas and the EU’s internal energy market), PASCHALi predicts that one of the major geopolitical factors influencing the market will be the new USA presidential term of Donald J. Trump which started on 20 January 2025.

Impacts to Your Business

Short Term: Analysts believe that Trump's policies, including tariffs, may spur USA oil production and drive down international oil prices. Given the UK’s energy market is closely dependent on the wholesale cost of oil, this would result in lower energy supply costs across the board, including renewable sources. Therefore, there may be short term business benefits to the drop in oil price!

Long Term: If the USA’s actions undermine global climate agreements, the UK could face higher costs in its green transition and may be pressured to scale up its own climate goals to compensate for the USA's retreat from international commitments. Businesses committed to sustainability may face higher costs for green energy supplies until the UK strengthens its energy security and renewable infrastructure.

Upcoming Legislation

Energy Savings Opportunity Scheme (ESOS): Recent updates to ESOS regulations now require participating organisations to submit a four-year action plan with subsequent annual progress updates, in addition to the standard compliance measures. The first deadline for this action plan is 5 March 2025. This plan will outline key opportunities and strategies for improving energy efficiency, enabling you to achieve long-term cost savings, for more information please read our article ‘Are you ESOS Phase 3 Compliant’.

Carbon Border Adjustment Mechanism (CBAM): If your business imports goods subjected to CBAM valued at €150 or more from non-EU countries into the EU, you are required to submit quarterly reports detailing their embedded emissions. By 2026, you must also apply for the status of ‘authorised CBAM declarant’. The UK is also set to introduce its own CBAM legislation in 2027. For further information on how this will impact your business and how PASCHALi can assist, please read our article ‘Understanding the Carbon Border Adjustment Mechanism (CBAM)’.

Market Wide Half-Hourly Settlement (MHHS): Starting in 2025, your electricity suppliers are required to transition all your Electricity Meters (MPANS) to Half-Hourly (HH) settlements, with full implementation expected by December 2026. This change should not incur any additional charges to your business and will allow you to accurately monitor and manage your energy usage. With access to this data PASCHALi can broker your business a more tailored cost-effective electricity offer.

Smart Meter Mandate: By the end of 2025 all businesses with fewer than 10 full-time employees will be offered a smart meter by their energy supplier. These meters provide real-time usage data, enabling your business to make more informed decisions and optimise your energy management.

Money Saving Opportunities

PASCHALi’s key recommendations for reducing energy costs include:

Energy Auditing: Our lead assessors will provide your business with tailored, cost-effective measures to minimise your energy usages and can ensure compliance with ESOS regulations. Additionally, we can implement ISO 50001 2018 , a recognised global standard of energy management systems, enabling your business to sustain long-term energy savings.

Brokering your Energy Supplies: PASCHALi has established strong relationships with a wide range of energy suppliers, including the UK’s largest: British Gas, SSE and EDF. As such we can secure the most competitive rates, tailored for your businesses energy needs.

kVA Reviews: Many electricity meter capacity agreements with the district network operators allow for significantly higher demands than required, a privilege you have to pay for. Through assessment of your annual half-hourly electricity consumption, it is possible to determine your maximum demand and request reductions in your agreed capacity. This could potentially save £1000’s from your annual electricity bill.

Your Next Steps

1. Review your Energy Brokering Strategy: 2025 is forecasted to be a volatile year for the energy market, it is crucial to secure the best deal for your energy supply. PASCHALi can leverage its extensive network of supplier contacts to recommend the best offer tailored for your business needs - all with zero upfront costs.

2 . Optimise Your Energy Consumption: Reduce your business’s energy costs by auditing your energy consumptions, PASCHALi can help implement targeted measures to optimise your energy usage, ensuring long-term savings and greater efficiency.

3. Remain Compliant: With existing and upcoming legislation set to impact your business in 2025, it is important that you remain compliant. PASCHALi offers expert guidance and ongoing support to help you navigate these regulatory changes.

For expert guidance and support with your 2025 energy needs, please contact us on Tel: 0113 400 1101 or email: info@paschali.co.uk .

Understanding the Carbon Border Adjustment Mechanism (CBAM)

Tue, 14 Jan 2025 12:07:36 GMT

What is CBAM?

The Carbon Border Adjustment Mechanism (CBAM) is an important regulatory framework designed to impose a tax on imports of carbon-intensive products. Its primary goal is to ensure that imported goods from outside the European Union (EU) and the United Kingdom (UK) are subject to a comparable carbon price as those produced domestically. This approach has significant implications for businesses engaged in international trade. We have developed our own PASCHALi Five Step Process to CBAM Compliance . Read on…

Objectives of CBAM

The main objectives of CBAM are to:

Address Carbon Leakage: The mechanism seeks to mitigate the risk of carbon-intensive production being relocated to countries with less stringent environmental regulations.
Reduce Greenhouse Gas Emissions : By aligning carbon costs for imported goods with domestic products, it incentivizes lower emissions.
Promote Global Progress Toward Net Zero: CBAM aims to drive global efforts in achieving net zero greenhouse gas emissions.

To remain compliant, businesses will be required to submit detailed emission reports for imported goods covered by CBAM.

Who Does CBAM Apply To?

· EU CBAM: Applies to businesses importing goods valued at €150 or more from non-EU countries (excluding participants in the EU Emission Trading System).
· UK CBAM: Applies to businesses importing goods valued at £50,000 or more over a 12-month period into the UK.

Key Features of CBAM

EU CBAM

1. Transitional Phase (1 October 2023 – 31 December 2025):

Importers are required to provide quarterly reports detailing the “ embedded emissions ” of goods covered under the EU CBAM; the first report was due on 31 January 2024.
From 2025, entities must apply for " authorised CBAM declarant " status for 2026.

2. Definitive Regime (from 1 January 2026):

CBAM Certificates: Importers must acquire carbon certificates based on the EU Emissions Trading Scheme (ETS) price (€/tonne CO ₂ ).
Emissions Reporting: Importers must declare the embedded emissions in their goods and surrender the corresponding certificates annually.
Carbon Price Deduction: Importers can deduct any carbon price that has already been paid in the country of origin.

UK CBAM

1. Consultation Phase (2023-2026):

The UK is currently conducting a consultation process. Legislation is being drafted and is expected to be in place from 1 January 2027.

2. Full Implementation (from 1 January 2027):

Annual Reports: Importers must report on both Scope 1 and Scope 2 embedded emissions for goods subject to the CBAM.
Carbon Pricing: A carbon price expressed in £/tCO ₂ e will be levied on the reported emissions.
· Liable Persons: Importers must register a ‘liable person’ with HM Revenue & Customs (HMRC), who will be responsible for completing and submitting a tax return evidencing the CBAM liability.

The Carbon Border Adjustment Mechanism represents a significant shift in regulating trade and environmental impact. As businesses navigate these changes, staying informed and compliant will be crucial for maintaining competitiveness in a low-carbon economy. For more information on how to prepare for CBAM and its implications for your operations, read our PASCHALi Five Step Process below and please don't hesitate to contact us.

PASCHALi Five-Step Process to CBAM Compliance

Businesses can effectively prepare for the Carbon Border Adjustment Mechanism by following our PASCHALi five steps to compliance:

Step 1. Understand Regulations: Stay informed about CBAM requirements specific to your industry.

Step 2. Evaluate Supply Chains: Identify and assess the carbon intensity of your products and suppliers.

Step 3. Conduct Emission Assessments: Measure and document the carbon emissions related to your imports.

Step 4. Adopt Sustainable Practices: Implement strategies to reduce your carbon footprint and improve efficiency.

Step 5. Establish Compliance Processes: Develop reporting systems and designate responsible personnel to ensure compliance.

By following our five step process, businesses can effectively prepare for the Carbon Border Adjustment Mechanism. This approach ensures compliance while also creating opportunities for sustainability and operational improvements. With PASCHALi’s expert assistance, you can confidently tackle your energy and compliance challenges.

At PASCHALi, we specialize in emissions reporting and possess a deep understanding of CBAM regulations. As a trusted, multi-award-winning energy and environmental consultancy, we provide expert guidance on the latest legislative developments, helping our clients navigate and maintain compliance with evolving regulations.

For tailored advice on how PASCHALi can assist you in meeting your energy and CBAM compliance needs, please contact us on Tel: 0113 400 1101 or email: info@paschali.co.uk.

Are you ESOS Phase 3 Compliant?

Tue, 13 Feb 2024 16:06:21 GMT

Check below to see if you have included the latest government updates to ensure your full compliance by 5 June 2024

As professional Lead Assessors and experts on Environmental Legislations we have done the heavy lifting and summarised the changes for you. We’ve scrutinised the new Statutory Instrument (SI) which came into force on 29 November 2023, and reviewed all the available government guidance. Check below to see if you are fully ready for disclosure.

Key updates include:

1. Extending the deadline for notification of compliance to 5 June 2024 (from the previous deadline of 5 December 2023).

2. Reducing the de-minimis to 5% of the undertaking’s Total Energy Consumption (TEC), meaning that at least 95% of the undertaking’s energy consuming assets must be audited.

3. Requiring all ESOS participants to produce an ESOS report, including those that used only alternative compliance routes for ESOS compliance.

4. The calculation and reporting of energy intensity metrics for buildings, transport, industrial processes, and any other relevant energy uses.

5. Including an estimate of energy savings achieved by the participant since the previous ESOS compliance period (for ESOS Phase 3, this is energy savings achieved between 06 December 2019 and 05 December 2023).

6. Energy Saving Opportunities must be classified by organisational purpose and energy saving category.

7. Energy Audits must include a suggested programme for implementing energy saving measures.

8. A list of available funding for implementing energy saving opportunities must be included.

9. If estimations are necessary, the reasons and methodology must be kept in the evidence pack.

10. For those reporting as the highest UK parent company, the disclosure of relevant information from the ESOS report to all members of the corporate group (e.g., identified energy saving opportunities and implementation plans that are relevant to a subsidiary).

11. Undertakings that consume less than 40,000 kWh over the annual reference period can now be exempt from appointing a lead assessor provided two board-level directors sign off on the compliance notification (for all other reports only one board-level director signature is needed).

12. For participants with an ISO 50001 energy management system certified by an accredited certification body and covering all energy supplies as included under ESOS, the total energy consumption must now be calculated in order to calculate energy intensity ratios.

13. Assets held in trust must be included in ESOS if the organisation that is party to the agreement for the supply of energy to the assets qualifies for ESOS.

14. Previously, the Environment Agency published a list of which undertakings complied with ESOS. In addition to this, the EA will publish energy consumption data, energy intensity ratios, estimates of energy savings achieved, action plans, and progress updates received from participants for Phase 3.

15. Following submission of the compliance notification:

a. Completing an ESOS Action Plan, setting out any commitments to implement energy efficiency measures. This action plan must be submitted by 05 December 2024, to cover the period of 06 December 2023 to 05 December 2027.

b. Completing two annual progress updates against the participant’s action plan. The deadline for the first progress update is 05 December 2025, and for the second progress update is 05 December 2026.

c. Note: Action plans and progress reports must be submitted, even if no action is to be taken. If action plans or progress reports are not submitted, the EA will publish that you do not intend to carry out any energy saving action.

A new online notification system will replace the ‘SmartSurvey’ system used in ESOS Phase 2. In the new online system, the Responsible Undertaking will be required to create a user account and can then add their Lead Assessor as an editor able to upload information. The Responsible Undertaking, not the Lead Assessor, will be responsible for submitting the notification.

The new online notification system is currently undergoing beta testing and will undergo a digital service assessment in February 2024. The EA have advised they will make the system available for submissions once all testing is completed.

Responsible Undertakings may receive a “pre-onboarding exercise” email from the Environment Agency, asking for basic company and contact information to be entered into an online form.

Please note that the qualification thresholds and dates have not changed; ESOS Phase 3 applies to all organisations that met either of the below qualification criteria on 31 December 2022:

1. Employed 250 or more people, or

2. Had an annual turnover in excess of £44 million, and an annual balance sheet total in excess of £38 million.

The 12 months of consecutive energy data for analysis must still include 31 December 2022.

Need help? Contact PASCHALi for expert advice and support.

info@paschali.co.uk ; Tel: 0113 400 1101

Ref:

1. Statutory Instrument (SI) which came into force on 29 November 2023

2. Webinar hosted by the Environment Agency (EA) and Department for Energy Security and Net Zero (DESNZ) on 25 January 2024.

3. Latest government guidance as published 29 November 2023.

Compliance Guidance for CSRD, ESOS, SECR, CDP, TCFD and IFRS

Mon, 20 Nov 2023 16:03:30 GMT

This article summarises the various compliance requirements for climate change, energy, carbon and sustainability, namely:

CSRD, ESOS, SECR, CDP, TCFD and IFRS.

There are a number of different reporting frameworks in the UK that companies are required to complete either mandatory or voluntary based on their size and/or turnover. Knowing what to disclose for these different frameworks can be challenging. Read on for more information....

CSRD

Corporate Sustainability Reporting Directive

What is it?

The CSRD, effective as of 5 January 2023, is an annual reporting of qualifying companies’ environmental and social impacts of their business activities and the impact that environmental and social governance efforts and initiatives have on the business. CSRD differs from its predecessor NFRD in that it requires a standalone report, whereas NFRD could be included in the business’ annual report. The CSRD requires a third-party to audit the sustainability information and data included in the report.

Who qualifies?

By 2028, all the following organisations will need to comply with CSRD.

For all types of organisation in the below table, to qualify you must meet at least two of three of the criteria outlined below, for two consecutive balance sheet dates.

*The European Commission adopted an amendment to the thresholds in the Accounting Directive in October 2023.

When do I need to comply?

The CSRD is being phased in over a period of years, a timeline of required compliance can be seen below.

Starting financial year 2024 (reporting in 2025): All companies already reporting NFRD.

Starting financial year 2025 (reporting in 2026): Large, listed companies not already reporting.

Starting financial year 2026 (reporting in 2027): Small and medium undertakings

Starting financial year 2028 (reporting in 2029): Third-country undertakings.

What are the penalties for non-compliance?

EU member states have an entity in place to impose “effective, proportionate and dissuasive” penalties. These are based on several factors including severity and duration of breach and financial standing of the company.

What should I do now?

Contact PASCHALi for expert advice and assistance with your CSRD reporting.

ESOS

Energy Savings Opportunity Scheme

What is it?

ESOS is the mandatory implementation of the Energy Efficiency Directive. It has been in force since 2014 and occurs in 4 year phases. We are currently in ESOS Phase 3. The aim of ESOS is to highlight where energy efficiency improvements can be made through an audit of a company's energy usage, transport data and energy saving measures. Completing ESOS to a high standard can have numerous benefits, not least the significant reductions in energy consumption and costs at a time of extreme energy market volatility.

What are the penalties for non-compliance?

Failure to comply with ESOS will result in an initial penalty of up to £5,000, followed by a daily fine of £500 for each working day of non-compliance.
Failure to undertake an energy audit will result in an initial penalty of up to £50,000, followed by a daily fine of £500 for each working day of non-compliance.

Who qualifies?

To qualify for ESOS, a company must fulfil at least one or both of the following criteria on 31 December 2022:

Employs more than 250 people in the UK.
Has a turnover in excess of £44 million and a balance sheet exceeding £38 million.

Companies which have a certified ISO 50001 energy management system covering 95% of all energy use do not need to undergo ESOS audits.

When is the deadline?

The deadline for ESOS Phase 3 was 5 December 2023 but has been pushed back to 5 June 2024.

What should I do now?

Contact PASCHALi for expert advice and assistance with your ESOS reporting.

ESOS Phase 3 legislation has been updated by the UK Government. For a detailed list of the updated requirements, please see our ' Are you ESOS Phase 3 Compliant? ' blog post.

SECR

Streamlined Energy and Carbon Reporting

What is it?

SECR is the annual reporting of qualifying companies' carbon emissions and energy usage. The main aim of SECR is to build on existing reporting and make it consistent with the financial year, making it easier to monitor and achieve reductions in carbon emissions each year. It also extends the scope of mandatory reporting to include more companies.

What are the penalties for non-compliance?

The Conduct Committee of the Financial Reporting Council can impose fines for non-compliance. There can also be fines imposed for late submissions, ranging from £150 up to £7,500, dependant on the lateness of submission and the type of company. In addition to this, Companies House can also reject annual accounts based on inadequate information provided.

Who qualifies?

SECR applies to all quoted companies (those which shares are traded on the stock exchange) and applies to companies that meet two out of the three following criteria:

1. Employs 250 employees or more in the UK.

2. Has an annual turnover in excess of £36 million.

3. Has an annual balance sheet in excess of £18 million.

Exemptions:

Organisations who use 40MWh or less, total electricity, gas and transport fuel, over the reporting period.
Public sector organisations; charities, universities, hospitals

All above organisations are encouraged to report even though it is not mandatory.

When is the deadline?

The deadline to submit SECR is dependant on your company's financial year end.

What should I do now?

Contact PASCHALi for expert advice and assistance with your SECR reporting.

CDP

Formerly the Carbon Disclosure Project

What is it?

CDP is a voluntary reporting framework that companies can use to disclose information and data on emissions and environmental impacts to their stakeholders. Results are graded from A to D-, with different focus areas, e.g. climate change, water and forests, scored separately. These scores are collated and the company given an overall grade. A high CDP score can bring many benefits as it shows a company's willingness to consider environmental impacts in their operation.

What are the penalties for non-compliance?

As CDP is voluntary, no penalties can be induced. However, a low score or no response reflects negatively on a company.

Who qualifies?

All companies can disclose through CDP, however it is usually by invitation from CDP.

When is the deadline?

The end of July every year. The exact date is announced at the start of each year.

What should I do now?

Contact PASCHALi for expert advice and assistance with your CDP reporting.

TCFD

Task Force on Climate-Related Financial Disclosures

What is it?

TCFD is a framework aimed at helping companies report on risks and opportunities they face in relation to climate change. It also aims to increase and improve reporting on financial information and how it is affected by climate-related risks. Companies are recommended to disclose in four key areas; governance, strategy, risk management, and metrics and targets.

What are the penalties for non-compliance?

Fines for non-compliance range from a minimum of £2,500 up to a maximum of £50,000.

Who qualifies?

All UK companies that produce an annual non-financial statement are required to comply with TCFD. Also required to comply are UK registered companies with:

- More than 500 employees

- A turnover of more than £500 million

When is the deadline?

The deadline for disclosure is dependant on your company's financial year end.

TCFD to be disbanded

After publication of TCFDs October 2023 report the TCFD will be disbanded and the responsibility of monitoring progress on climate-related financial disclosures will be passed onto the IFRS Foundation. The will be effective for annual reporting periods beginning on or after 1st January 2024

IFRS S1 & S2

International Financial Reporting Standards 1 & 2

What is it?

The International Sustainability Standards Boards (ISSB) issued its inaugural standards, IFRS S1 & IFRS S2 on the 26 June 2023, both aimed at fully incorporating the recommendations of the TCFD. The aim of these new standards is to provide a global baseline of sustainability-related disclosures so that companies can have more comparability in the monitoring of disclosures and progresses towards the broad use of high-quality disclosures.

IFRS S1
Required to provide the governance processes, controls and procedures used to monitor, manage and oversee sustainability-related risks, the processes used to identify, assess, prioritise and monitor sustainability-related risks and opportunities.
Provide the performance in relation to sustainability-related risks and opportunities, including progress towards any targets set or are required to be met by law or regulation.

IFRS S2
Required to provide the same information as IFRS S1 but for climate-related risks and opportunities.

What are the penalties for non-compliance?

There are no explicitly stated penalties in the standards but the enforcement of the standards will be carried out by the regulatory bodies of each jurisdiction.

It should be noted that failure to comply could have significant implications beyond any legal penalties, such as damage to the companies reputation.

Who qualifies?

Yet to be mandatory in the UK but the UK Government has said it will adopt the new standards by July 2024 latest.

When is the deadline?

IFRS S1 & S2 will be required to be reported in companies annual reporting periods starting on or after 1 January 2024.

What should I do now?

Contact PASCHALi for expert advice and assistance with your IFRS reporting.

Energy Bill Discount Scheme Summary

Wed, 11 Jan 2023 12:10:31 GMT

Non-Domestic Energy Bill Discount Scheme Summary

Based on government information published 10 January 2023

The government has announced the new Energy Bill Discount Scheme for businesses and other non-domestic customers. The scheme will support this sector by giving a discount on energy bills based on the price of wholesale energy costs. The scheme will run from 1 April 2023 to 31 March 2024, following the end of the Energy Bill Relief Scheme on 31 March 2023.

A reminder on what "Wholesale Energy Cost" is?

The price of wholesale energy is the price at which your energy supplier purchases the energy they provide you. Historically, this formed around one third of your overall energy bill, but since the energy crisis, this has now increased to more than half. Other non-wholesale costs vary from supplier to supplier.

What is the new Energy Bill Discount Scheme?

In relation to the previous Energy Bill Relief Scheme, which will end of 31 March 2023, PASCHALi understands that the revised level of support provided by the new Energy Bill Discount Scheme is significantly less in comparison . The previous Energy Bill Relief Scheme provided organisations with bill reductions of around 40%. The new Energy Bill Discount Scheme will instead provide very small reductions, giving a discount of circa 3% on energy bills (compared to 40% previously) . See our demonstrative examples further below for context.

On face value, the new scheme may seem beneficial to organisations, however in the current energy crisis, the level of support offered is actually very little.

In Summary:

A discount will be applied to both gas and electricity bills for non-domestic organisations, provided the supply's wholesale price is above a certain threshold:
For the wholesale price of electricity , this threshold is 30.2 pence per kilowatt hour.
For the wholesale price of gas , this threshold is 10.7 pence per kilowatt hour.

If wholesale prices rise above this threshold, you will be eligible for the following discounts on your bills:
For electricity, the maximum discount is 1.961 pence per kilowatt hour.
For gas, the maximum discount is just below 0.697 pence per kilowatt hour.

Changes will apply to fixed contracts agree d on or after 1 December 2021. Those on newly-signed fixed contracts and out-of-contract variable tariffs are also eligible for the scheme.

The scheme will last for 12 months, from 1st April 2023 to 31 March 2024.

The scheme will apply to all non-domestic organisations, including businesses, schools, hospitals, churches etc.

The basic scheme will be applied to all organisations, you do not need to contact suppliers as reductions will be automatically applied to bills from 1st April 2023.

Organisations in energy and trade intensive industries (ETIIs) are eligible to receive a higher level of support, however these organisations will need to submit an application to the government (further details on this will be published by the government soon) and are subject to different wholesale price thresholds:
For the wholesale price of electricity , this threshold is 18.5 pence per kilowatt hour.
For the wholesale price of gas , this threshold is 9.9 pence per kilowatt hour.

If wholesale prices rise above this threshold, approved ETII organisations will be eligible for the following discounts:
For ETII electricity, the maximum discount is 8.9 pence per kilowatt hour.
For ETII gas, the maximum discount is 4 pence per kilowatt hour.

A list of eligible ETII sectors can be found here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1128033/230104_ETII_List_for_gov.uk.pdf

Demonstrative examples based on examples provided by the UK Government:

Pub (Fixed Contract):

A pub uses 4,000 kWh of electricity and 16,000 kWh of gas a month. They signed a fixed contract in August 2022, giving them a current monthly energy bill of around £7,000 . Under the Energy Bill Discount Scheme, they could receive a maximum discount of £189.96 per month (2.7%) .

School (Fixed Contract):

A school uses 10,000 kWh of electricity and 22,000 kWh of gas a month. They signed a fixed contract in July 2022, giving them a current monthly energy bill of around £10,000. Under the Energy Bill Discount Scheme, they could receive a maximum discount of £349.44 per month (3.5%).

ETII manufacturing business (Variable Tariff):

An ETII manufacturing business has successfully applied to the government's higher level of support for ETIIs. The business uses 200,000 kWh of electricity and 1,600,000 kWh of gas each month. The business is on variable tariff, giving them a current monthly energy bill of around £560,000 . As they are in an energy and trade intensive industry (ETII), they are eligible for a higher level of support. Under the Energy Bill Discount Scheme for ETII businesses, they could receive a maximum discount of £81,800 per month (14.6%).

Small retail shop (Variable Tariff):

If you need further information or support call PASCHALi on 0113 400 1101 or email us at info@paschali.co.uk

Ref: https://www.gov.uk/guidance/energy-bills-discount-scheme

Winter 2022 Newsletter

Thu, 08 Dec 2022 10:36:01 GMT

Energy Market Update

Thu, 24 Nov 2022 16:49:26 GMT

Energy Market Update

24 November 2022

See the graph below for the UK wholesale energy commodity pricing for the period of August 2021 to December 2022, updated on 24 November 2022.

This week saw wholesale prices for both gas and electricity rise as demand increases due to forecasted cold temperatures. French nuclear supply outages and continued uncertainty of Russian gas supply have caused further volatility.

If your commercial energy contracts are up for renewal or you need advice on reducing your energy consumption, get in contact with one of our PASCHALi consultants. We will be more than happy to help.

Compliance Guidance for ESOS, SECR, CDP and TCFD

Wed, 26 Oct 2022 15:22:15 GMT

Updated 10/1/23

There are a number of different reporting frameworks in the UK that companies can voluntarily or are required to comply with based on their size and/or turnover. Knowing what to disclose for these different frameworks can be challenging. This article summarises what the requirements are for compliance with ESOS, SECR, CDP and TCFD.

ESOS

Energy Savings Opportunity Scheme

What is it?

What are the penalties for non-compliance?

Failure to comply with ESOS will result in an initial penalty of up to £5000, followed by a daily fine of £500 for each working day of non-compliance.

Who qualifies?

To qualify for ESOS, a company must fulfil at least one or both of the following criteria on 31 December 2022:

Employs more than 250 people in the UK.
Has a turnover in excess of £44 million and a balance sheet exceeding £38 million.

Companies which have a certified ISO 50001 energy management system covering 95% of all energy use do not need to undergo ESOS audits.

When is the deadline?

The deadline for ESOS Phase 3 is 5 December 2023.

What should I do now?

Contact PASCHALi for expert advice and assistance with your ESOS reporting.

SECR

Streamlined Energy and Carbon Reporting

What is it?

What are the penalties for non-compliance?

The Conduct Committee of the Financial Reporting Council can impose fines for non-compliance. There can also be fines imposed for late submissions, ranging from £150 up to £7500, dependant on the lateness of submission and the type of company. In addition to this, Companies House can also reject annual accounts based on inadequate information provided.

Who qualifies?

SECR applies to all quoted companies (those which shares are traded on the stock exchange) and applies to companies that meet two out of the three following criteria:

1. Employs 250 employees or more in the UK.

2. Has an annual turnover in excess of £36 million.

3. Has an annual balance sheet in excess of £18 million.

When is the deadline?

The deadline to submit SECR is dependant on your company's financial year end.

What should I do now?

Contact PASCHALi for expert advice and assistance with your SECR reporting.

CDP

Formerly the Carbon Disclosure Project

What is it?

What are the penalties for non-compliance?

As CDP is voluntary, no penalties can be induced. However, a low score or no response reflects negatively on a company.

Who qualifies?

All companies can disclose through CDP, however it is usually by invitation from CDP.

When is the deadline?

The end of July every year. The exact date is announced at the start of each year.

What should I do now?

Contact PASCHALi for expert advice and assistance with your CDP reporting.

TCFD

Task Force on Climate-Related Financial Disclosures

What is it?

What are the penalties for non-compliance?

Fines for non-compliance range from a minimum of £2,500 up to a maximum of £50,000.

Who qualifies?

All UK companies that produce an annual non-financial statement are required to comply with TCFD. Also required to comply are UK registered companies with:

- More than 500 employees

- A turnover of more than £500 million

When is the deadline?

The deadline for disclosure is dependant on your company's financial year end.

What should I do now?

Contact PASCHALi for expert advice and assistance with your TCFD reporting.

Knowing what to disclose for these different frameworks can be challenging. At PASCHALi, expert advice and assistance can be given to ensure reporting is done to the highest standard for your company. To make use of our expertise, do not hesitate to get in touch.

PASCHALi Heat Pumps Briefing Note

Wed, 19 Oct 2022 10:51:10 GMT

What are heat pumps?

A heat pump is a device that can be used to heat a building by transferring thermal energy from outside to the inside of a building. There are a number of different types of heat pumps dependant on where the initial thermal energy source is, however, the fundamentals of the heat pump remain constant.

The key components of heat pumps are an evaporator, a compressor, a condenser, and an expansion valve.

How do they work?

Sources such as the air and ground contain thermal energy that can be gathered for use in heating properties through use of heat pumps. For ground source heat pumps, water circulating through pipes in the ground is mixed with antifreeze to make a brine. Thermal energy from the ground is absorbed into the brine. For air source heat pumps, a fan coil is used to absorb the thermal energy from the surrounding air.

The brine or heat from the coil passes through a heat exchanger called an evaporator. The evaporator consists of two sides, between which is a heat transfer plate. Heat from the brine or coil flows through this plate into a secondary chamber containing a refrigerant liquid. As the heat passes into the refrigerant, it begins to boil and turn into a gas.

The refrigerant gas is then fed into a compressor and greatly compressed to increase its pressure and thus it temperature. The compressor requires electrical input in order to do this. The majority of electrical power in the system is consumed here.

The now hot gas refrigerant flows to another heat exchanged called the condenser. Heat from the gas refrigerant passes through a heat transfer plate into the property’s space heating system, usually consisting of radiators, underfloor heating or a cylinder coil if heating domestic water. Using radiators with larger surface areas means the compressor has to work less hard, meaning it uses less electricity so will save on costs.

Having transferred its heat, the refrigerant begins to cool. It then flows into an expansion valve where its pressure is decreased and naturally turns back into liquid for use in the cycle again.

How is the efficiency of a heat pump measured?

A coefficient of performance can be calculated to determine the amount of heat produced for every unit of electricity consumed. The coefficient usually ranges between 3 and 6. If a heat pump has a coefficient of 3, then it produces 3 units of heat from every one unit of electricity consumed. Due to seasonal changes, a more accurate way of measuring a heat pump’s efficiency all year round is a Seasonal Performance Factor (SPF), which is specifically calculated using average temperatures at the system’s location and other technical details such as radiator size.

What are the different types of heat pump?

Air source heat pumps

Air at any temperature contains some energy. Air source heat pumps transfer this energy as heat from the outside to the inside of the building for use heating either domestic hot water or space heating.

In order to transfer the outside heat energy into the heat pump, an outdoor air source fan coil is used to extract the heat from the ambient air. While installation costs are high, they are less than that of ground source heat pumps, although they lack the ability to utilise the thermal storage capacity of the ground making them slightly less efficient. For certain types of air source heat pumps, the process can be reversed in periods of warmer weather, extracting warm air from inside a building in order to cool it.

Ground source heat pumps

Instead of using the thermal energy of the air, ground source heat pumps utilise the thermal capacity of the ground to extract stored heat energy for use in the heat pump. This is usually done in one of two ways:

Horizontal (Shallow ground source coil)

As series of closed loop systems can be installed using overlapping coils of pipe. These coils are laid out in purpose-built trenches. The overlapping coils have a series of horizontal heat converters that extract the thermal energy stored in the ground for use in the heat pump.

Vertical (Pipe loop in deep borehole)

Vertical systems consist of a number of boreholes in which U-shaped pipes are fitted containing a heat carrying fluid is contained. The heat stored in the ground surrounding the borehole is extracted into the fluid for use in the heat pump.

What’s the difference between a ground source heat pump system to geothermal energy?

Rather than using a heat pump to warm buildings, geothermal heating uses geological areas of naturally occurring thermal energy such as hot springs or rocks with high internal thermal production like radioactive granite. Water in hot springs can be used to directly heat homes using wet systems (radiators and underfloor heating), whereas geothermal reservoirs can be created over naturally occurring rocks with high internal heat production, which will heat the water ready for use above the surface. Both these systems do not require the use of a heat pump as the water is already at a sufficient temperature to be used for heating.

In England, areas such as Southampton have utilised a geothermal borehole to provide a district heating scheme for over 2,500 residential customers, along with numerous offices, shopping centres, hospitals and the city’s university.

Non-Domestic Energy Bill Relief Scheme Summary

Mon, 26 Sep 2022 11:53:24 GMT

Our explanation of the UK Government's scheme to assist commercial energy bills

Based on government's scheme published 21 September 2022

(includes updates announced on 1 October 2022 and 10 October 2022 )

The government has released further information on the Energy Bill Relief Scheme for businesses and other non-domestic customers. The scheme will support this sector by placing a cap on the price of wholesale energy costs.

What is "Wholesale Energy Cost"?

The price of wholesale energy is the price at which your energy supplier purchases the energy they provide you. Historically this formed around one third of your overall energy bill, since the energy crisis however, this has now increased in excess of two-thirds. Other non-wholesale costs vary from supplier to supplier.

What is the "Non-domestic Energy Bill Relief Scheme"?

In Summary:

Introduction of a cap on wholesale energy costs for non-domestic sector, reducing bills by up to a third.
21.1 p/kWh cap for wholesale electricity.
7.5 p/kWh cap for wholesale gas.
For comparison, wholesale costs (as described above) in England, Scotland and Wales for this winter are currently expected to be around: 60 p/kWh for electricity and 18 p/kWh for gas (UK Gov)

Changes will apply to fixed contracts agreed on or after 1 December 2021 . Will also apply to deemed, variable and flexible tariffs and contracts.

Scheme will last for 6 months, from 1st October 2022 to 31 March 2023.

Following this, business areas deemed ‘vulnerable’ will be given continued support.
Unclear as of yet which types of businesses these will be. There will be a review after 3 months.

Will apply to all non-domestic organisations, including businesses, schools, hospitals, churches etc.

Organisations do not need to contact suppliers, reductions will be automatically applied to bills from 1st October.

Level of price reduction for each business will vary depending on contract type.

Non-domestic customers on existing fixed contracts agreed on or after 1 December 2021 will be eligible provided their current wholesale price is above the government supported price. Customers entering new contracts after 1 October 2022 will receive the same support.

Those on default, deemed or variable tariffs will receive a per unit discount up to a maximum of the difference between the government supported price and the average expected wholesale price over the period of the scheme. The maximum discount for those on a default or variable tariff contract, as updated on 1 October 2022, has been set at 34.5 p/kWh for electricity and 9.1 p/kWh for gas.

For those on flexible purchase contracts, the level of reduction offered will be calculated by suppliers according to the specifics of that company’s contract and will also be subject to the maximum discount.

How you will get the reduction:

Existing fixed price contract:

If you agreed your fixed price contract / tariff on or after 1 December 2021 you will get support if the calculated wholesale element of the price you are paying is above the government supported price.

If your fixed tariff is based on wholesale prices below the government supported price, then you will not be eligible for support.

Your per unit energy costs will automatically be reduced by the relevant pence per Kilowatt Hour (p/kWh) for the duration of the scheme.

New fixed price contract:

The relevant price reduction will be automatically applied to your bill by your supplier.

Default or variable tariff contract:

If you are on a variable tariff, and want to remain on it, you will get the reduction, subject to the ‘maximum discount’.

The maximum discount will be calculated by comparing the government supported price with the average of expected wholesale prices for delivery across the 6 months of the scheme. The maximum discount, for those on a default or variable tariff contract, has been set at 34.5 p/kWh for electricity and 9.1 p/kWh for gas.

If wholesale prices rise above the combined government supported price and maximum discount, then your prices will increase. The government have introduced a floor price, set at the government supported price of 21.1 p/kWh for wholesale electricity and 7.5 p/kWh for wholesale gas, ensuring that customers are not paying below these supported price once the discounts has been applied.

Flexible Purchase contract:

If you’re on a flexible purchase contract, your price reduction will depend on the difference between your monthly weighted average baseload price (determined by your individual hedging approach) and the government supported price. In this case the maximum support available per unit of energy will also be limited by the maximum discount.

Fixed contract signed before 1 December 2021 :

If you signed your fixed rate contract before on or after 1 December 2021, you would not have been exposed to the recent rises in wholesale prices, so you will not be eligible for support under the scheme.

Out of contract:

If you are out of contract and are waiting to see the details of government support, you should set up your contract as normal. Your supplier will automatically apply appropriate reductions to your energy price for the duration of the scheme.

Demonstrative examples based on examples provided by the UK Government:

Pub (Fixed Contract):

A pub uses 4,000 kWh of electricity and 16,000 kWh of gas a month. They signed a fixed contract in August 2022, giving them a current monthly energy bill of about £7,000. At the time they signed their contact, wholesale prices for the next 6 months were expected to be higher than the Government Supported Price of 21.1 p/kWh for electricity, and 7.5 p/kWh for gas, meaning they can receive support under this scheme. The difference between expected wholesale prices when they signed their contract and the Government Supported Price is worth 38 p/kWh for electricity and 10 p/kWh for gas, meaning they receive a discount of £3,120 per month, reducing their bill by 44.6%.

School (Fixed Contract):

A school uses 10,000 kWh of electricity and 22,000 kWh of gas a month. They signed a fixed contract in July 2022, giving them a current monthly energy bill of about £10,000. At the time they signed their contact, wholesale prices for the next 6 months were expected to be higher than the government supported price of 21.1 p/kWh for electricity, and 7.5 p/kWh for gas, meaning they can receive support under this scheme. The difference between expected wholesale prices when they signed their contract and the government supported price is worth 24 p/kWh for electricity and 7 p/kWh for gas, meaning they receive a discount of £3,940 per month, reducing their original bill by 39.4%.

Medium-sized manufacturing business (Fixed Contract):

A medium sized manufacturing business uses 200,000 kWh of electricity and 1,600,000 kWh of gas each month. They entered into a fixed contract in August 2022, giving them a current monthly energy bill of around £560,000. At the time they signed their contact, wholesale prices for the next 6 months were expected to be higher than the government supported price of 21.1 p/kWh for electricity, and 7.5 p/kWh for gas, meaning they can receive support under this scheme. The difference between expected wholesale prices when they signed their contract and the government supported price is worth 36 p/kWh for electricity and 90 p/kWh for gas, meaning they receive a discount of £216,000 per month, reducing their original bill by 38.6%.

Medium-sized restaurant (Variable Contract - Assuming maximum discount has been applied):

A medium sized restaurant uses around 35,000 kWh of electricity and 4,000 kWh of gas each month. They are on a variable contract, giving them a current monthly energy bill of around £3,900 per month. As they are on a variable contract they can receive support up to the Maximum Discount at 34.5 p/kWh for electricity and 9.1 p/kWh for gas . Applying the Maximum Discount rates means that their monthly energy bill reduces by 40.3% to £2,328.

Hospital (Fixed Contract):

A hospital uses around 2,000,000 kWh of electricity and 7,900,000 kWh of gas each month. They are on a fixed contract that they signed in June 2022, giving them a current monthly energy bill of about £1.7 million. At the time they signed their contact, wholesale prices for the next 6 months were expected to be higher than the government supported price of 21.1 p/kWh for electricity, and 7.5 p/kWh for gas, meaning they can receive support under this scheme. The difference between expected wholesale prices when they signed their contract and the government supported price is worth 7.6 p/kWh for electricity and 27 p/kWh for gas, meaning they receive a discount of £365,300 per month, reducing their original bill by 21.5%.

Small retail shop (Variable Contract - Assuming maximum discount has been applied):

A small retail shop uses around 1,000 kWh of electricity and 2,000 kWh of gas each month. They are on a variable contract, giving them a current monthly energy bill of around £1,300 per month. As they are on a variable contract they can receive support up to the Maximum Discount at 34.5 p/kWh for electricity and 9.1 p/kWh for gas . Applying the Maximum Discount rates means that their monthly energy bill reduces by 40.5%, leaving them with a bill of £773 per month.

If you need further information or support call PASCHALi on 0113 400 1101 or email us at info@paschali.co.uk

Ref: https://www.gov.uk/guidance/energy-bill-relief-scheme-help-for-businesses-and-other-non-domestic-customers

EU Energy News Bulletin

Sun, 25 Sep 2022 15:20:24 GMT

Update on European Union Energy Crisis Support

(as of 15th September 2022)

This is an update on the actions taken by the European Union to tackle the current energy crisis. For actions taken by the UK government, please see Energy News Bulletin (UK).

¨ EU continues sanctions against Russia, attempting to destabilise Russia’s economic situation.

¨ Ukraine has been successfully connected to the EU electricity grid. The operation was initially scheduled for 2024, however took only two weeks to complete.

¨ Any import duties on Ukrainian exports to the EU have been suspended, and progress has been to enable their access to the Single Market.

¨ Key aim is to remove dependency on Russian fossil fuels through joint storage for future energy generation, currently exceeding target at 84%.

¨ EU reliance on fossil fuels has also been diversified to other suppliers including Algeria, Norway and the United States, reducing Russia’s gas export to the EU from 40% last year to 9%.

¨ EU are encouraging citizens to reduce demand at peak hours through changing their behaviour with the aim of conserving supply and lowering prices.

¨ Proposal of a windfall tax on electricity and fossil fuel companies in order to channel excess profit, predicted to be in the region of 140 billion euros.

¨ There is also a commitment to undertake a ‘deep and comprehensive’ reformation of the energy market to decouple the dominant influence of gas on electricity prices.

¨ This reform will also include separating energy generated from renewable sources into a separate market, allowing consumers to benefit from lower electricity prices due to reduced cost of generation.

Information can be found here: https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_22_5389

Domestic Energy Relief Scheme Summary

Tue, 13 Sep 2022 08:18:14 GMT

Update on UK Domestic Energy Crisis Support

(as of 25 October 2022 )

UK Gov has introduced “Energy Price Guarantee” for the domestic sector.

Typical household will now pay no more than £2,500 a year for the next 6 months from 1 October 2022. This will save consumers around £1000 per year, £150 of which will come from temporary suspension of green levies.

¨ If you’re on a domestic standard variable tariff, the average unit price for dual fuel customers paying by direct debit will be limited to 34.0p/kWh for electricity and 10.3p/kWh for gas, inclusive of VAT, from 1 October.

¨ If you’re on a domestic fixed tariff at a higher rate caused by recent energy price rises, your unit prices will be reduced by 17p/kWh for electricity and 4.2p/kWh for gas.

Newly agreed contracts will also be capped at the Energy Price Guarantee if priced above the cap price.

The scheme will not be funded through by a windfall tax.

Further details to be released following the imminent meeting of Parliament this week.

For information on the non-domestic relief scheme, see our blog post at https://www.paschali.co.uk/commercial-energy-bill-relief-scheme-summary

Information can be found here: https://www.gov.uk/government/publications/energy-bills-support/energy-bills-support-factsheet-8-september-2022

Workplace Electric Vehicles and Smart Charging

Tue, 22 Feb 2022 09:32:28 GMT

What does new legislation mean for your workplace?

After the UN Climate Change Conference in Glasgow in November 2021, legislation was passed that all new cars and vans sold in the UK must be fully electric by 2035. The latest legislation has requirements for smart charging, with implications that controlling energy flow and charging times are the future of EV charging points. Smarter charging is encouraged by requiring smart cables to avoid charging during peak hours (8-11am and 4-10pm on weekdays).

There are also local laws regarding implementing electric vehicle charge points. Many cities refer to the London Plan as a standard when setting their own charge point guidance. The London Plan requires 20% of parking spaces in new residential developments to have active charging facilities, and 10% of parking bays to have passive charge points.

There is a government funded Workplace Charging Scheme (WCS) that provides financial support to businesses wishing to have electric vehicle charge points installed at their work premises. Destination and workplace locations will be targeted as areas to expand and add charging points, as EVs can stay on charge for longer periods and therefore reduce the impact on the electrical grid. Requirements to retrofit EV chargers in existing workplace car parks is just a matter of time and infrastructure planning.

PASCHALi recommends that organisations anticipate and comply with the regulations being implemented in the near future. For more details on regulations and on PASCHALi’s recommendations, you can download our full Workplace Electric Vehicles and Smart Charging brief here.

Gas and Electricity Bills: Are You Feeling the Pinch?

Tue, 08 Feb 2022 16:12:02 GMT

Why are energy prices rising?

Over the last six months, global wholesale energy prices have increased dramatically to record high levels. Here in the UK, businesses and households have felt the rise but have yet to be hit by the worst of it.

Who is increasing energy prices?

Suppliers purchase energy at wholesale prices and then sell it to domestic and business customers. When wholesale prices go up, energy suppliers pass the costs on by increasing their rates. Although prices have been fluctuating, the overall trend is up.

We’ve created a chart depicting just how much the wholesale energy prices have spiked in the last year, as well as a rough prediction on how we think 2022 will play out.

While energy suppliers are dealing with the skyrocketing prices now, businesses and households will feel the effects very soon as suppliers pass the costs on.

For domestic households, an energy regulator sets a price cap: the maximum price that suppliers can charge. There is no price cap to protect businesses from these increased costs.

Why do energy prices increase over the winter holidays?

Energy prices generally fluctuate with the seasons. During the colder and darker months, demand is increased while supply may be limited.

Weather is one of the main drivers of volatility for natural gas prices. Natural gas is primarily used for heating, so when a winter is particularly cold, demand for natural gas substantially increases. This increased demand can cause a shortage in the market which will push prices higher.

Solar generation is minimal as the daylight hours are shortened. Wind generation is usually stronger over winter, but sporadic. Overall, the country cannot rely on renewables during times of high demand.

Why are energy prices increasing by record levels?

There are several unexpected factors at play that are causing fluctuations in the global energy market:

There are gas shortages across Europe caused by long and cold winters in 2020 and 2021. Storage facilities are extremely depleted.

Rising tensions between Russia and Ukraine are causing concern for potential gas and oil supply disruptions. The Nord Stream 2, a pipeline running from Russia to Europe (and bypassing Ukraine) with the capacity to supply up to 26 million households with natural gas, is unlikely to be certified.

A high demand for liquefied natural gas (LNG) in Asia is causing Europe to rely on limited natural gas storage.

French nuclear output for 2022 is estimated to decrease by 10% due to faults in several nuclear reactors that cause prolonged outages.

COVID restrictions are easing worldwide, increasing demand globally.

Specifically in the UK:

Lower winds than expected result in very low renewable energy generation.

National gas reserves only contain roughly 2% of the UK’s annual demand.

A National Grid site fire has shut down a power cable between France and the UK, limiting power supplied from the continent until fully repaired in October 2023.

Will energy prices keep going up? What can I do about my high energy bills?

Energy prices are predicted to continue rising and those with out of contract rates will be affected by future volatility in the market. If you find your increasing utility costs to be of concern, we offer brokering services in electricity, gas, and water for businesses of all sizes. We work directly with suppliers to ensure competitive “locked in” rates for our clients. If your business is looking for a review of your current energy contracts, new rates, or to switch energy suppliers, we can help you find the best deal.

PASCHALi Is Now Carbon Neutral!

Wed, 13 Jan 2021 14:40:26 GMT

Photo Credit: The Gold Standard

At PASCHALi, we practice what we preach!

PASCHALi is now a carbon neutral company! Through a series of carbon reduction initiatives and carbon offsetting we now have a net-zero impact on carbon levels in the Earth’s atmosphere. We are also proud to be supporting a wind farm in Indonesia which supplies power to over 70,000 homes and has created 35 new local jobs.

This blog post walks you through our journey to becoming carbon neutral and how we can support you to do the same!

Step 1 – Calculating our Carbon Emissions

Step 2 – Setting a Target

Step 3 – Carbon Reduction Initiative

Step 4 – Utilisation of Renewable and Low-Carbon Energy Technologies

Step 5 – Carbon Offsetting

Step 1 - Calculating our Carbon Emissions

The first step to becoming carbon neutral is to calculate your emissions. As a minimum, it is important to cover all emissions you have operational control over. You can also expand this to include upstream and downstream emissions associated with your business. Emissions are categorised as Scopes and grouped in the following ways:

Scope 1 – Direct emissions from company owned facilities and vehicles

Scope 2 – Indirect emissions through the purchase of electricity, steam, heating and cooling

Scope 3 – All other indirect emissions, including public transport, hotel stays, paper usage, waste & recycling

We use the DEFRA 2020 emissions conversion factors to calculate annual carbon emissions in tonnes of carbon dioxide equivalent. The 'equivalent' means that our calculations also take into account other greenhouse gases such as nitrous oxide and methane. The other greenhouse gases are multiplied by a factor, depending on their heating potential compared to carbon dioxide. DEFRA produce an updated catalogue of conversion factors each year, making them a great choice to produce accurate carbon calculations for UK businesses.

Step 2 - Setting a Target

The next step in the journey is to set your goals and targets for the project. We recommend setting an emissions goal i.e. carbon neutral, carbon negative, and also setting a target date for completion. We also suggest you consider how you would like to reach these goals. There are many ways of reducing your carbon emissions and the most impactful and sustainable method differs from company to company. It is also important to think about what you want to do going forward. Are you happy maintaining your current emissions targets or do you want to improve?

Our primary target was to become carbon neutral before the end of 2020. Our secondary targets include maintaining this achievement each year and to continue lowering our emissions wherever possible.

Step 3 - Carbon Reduction Initiatives

At PASCHALi, we believe the best way to reach carbon neutrality is by focusing on reducing your existing emissions. A lot of small changes can have a significant impact on your overall emissions and ultimately save you a lot of money in the process too.

There are many simple ways to reduce your carbon emissions in both industrial and office settings. Here is just a short list of ideas which also have to be integrated with measure to reduce the risk of spreading covid-19:

· Replacing old motors with newer ie4 or above

· Adjusting VSD settings

· Adjusting BMS settings

· Promoting virtual meetings - we recognise that the current pandemic has forced this upon us anyway!

· Upgrading lighting to LED and installing sensors

· Behavioural changes and training for employees

Carbon reduction initiatives are a great way of cutting your emissions across the board. Simple behavioural and equipment changes as the ones mentioned above can compound to significantly lower your carbon emissions. They are also usually one of the most cost effective ways to do so.

Step 4 - Utilisation of Renewable and Low-Carbon Energy Technologies

Renewable and Low-Carbon technologies are a good option for the larger companies who own their facilities and have a larger budget to work with. A few methods of this include:

· Renewable energy installations (e.g. wind turbines, solar panels)

· Low-carbon installations (e.g. CHP, biomass, heat pumps)

· Power purchase agreements

· Upgrading to electric vehicles (EV)

· Low carbon/green energy tariffs

These methods mainly target your Scope 1 and Scope 2 emissions by cutting the emissions at source. Although they are generally more expensive and require more planning, these changes can make a big impact and set your company up for the future as permanent changes to your operation. Renewable energy installations or EV usage can also improve your company's public image.

As we rent out office space in a shared building, we don't have control over our energy supplier and our neighbours would be less than happy if we constructed a wind turbine in the already packed car park! However, when new our building was built, it had the highest BREAAM rating in the country.

Step 5 - Carbon Offsetting

Although carbon offsetting receives some bad press and some see it as a form of ‘greenwashing’, it is often a necessary step to counteract the final portion of emissions which cannot be avoided.

Carbon offsetting is the name given to funding projects around the world that ultimately reduce carbon emissions. For example, this could be a wind turbine project in South America, improved cooking facilities in Africa or even planting trees here in the UK. Larger companies may wish to set up their own carbon offsetting projects, however there are also a number of reputable businesses set up to sell carbon credits in verified projects.

To offset the carbon emissions we could not avoid, PASCHALi turned to the Gold Standard, one of the most reputable businesses supporting environmental projects all around the world.

For 2020 and 2021, we have chosen to support the Sidrap wind farm project in Indonesia. This project consists of 30 wind turbines, combining for 75MW of installed capacity on the Indonesian island of Sulawesi. As Indonesia's first commercial size wind farm, it can annually generate over 250,000MWh and power over 70,000 local homes. The project has also created 35 new jobs in the area while improving air quality by reducing Indonesia's heavy reliance on oil and coal. Click here to learn more about the Sidrap wind farm project.

Now it's Your Turn

To learn more about Carbon Neutrality, what it means and how it can positively impact your business, visit our Carbon Zero Support page. Wherever you are in your journey to net-zero, PASCHALi can support you.

CIBSE EPG: Green Energy Tariffs, Power Purchase Agreements, Offsetting and Insetting

Thu, 01 Oct 2020 10:46:27 GMT

Something we thought you might find interesting...

On 25th September 2020, CIBSE hosted an EPG Power Hour webinar covering the topics of green energy tariffs, power purchase agreements, offsetting and insetting. The topics covered in this webinar provide a useful insight into the greener/cleaner options available to both commercial and domestic energy users and alternative solutions to lower your net carbon emissions.

The hour long webinar is split into three 10 minute segments and ends with a Q&A session, see timings below:

Introduction: 0:00 to 3:00

Green Tariffs: 3:00 to 12:30

Power Purchase Agreements: 12:30 to 23:30

Offsetting & Insetting: 23:30 to 32:00

Q&A Session: 32:00 to 54:30

Click the image below to be taken to the video:

CRC, MGHGR and now SECR? - It's all abbreviations to me!

Fri, 25 Sep 2020 15:56:00 GMT

Demystifying Energy and Carbon Reporting Regulations

Due to the varying requirements and differing qualification criteria of The CRC Energy Efficiency Scheme (CRC) and the Mandatory Greenhouse Gas reporting (MGHGR) legislation organisations became confused.

You don’t need to be a rocket scientist to see that the CRC and MGHGR regulations were onerous and that the essence of these regulations - encouraging energy and carbon reduction - was becoming lost in burdensome administrative tasks.

In response, the UK government reviewed and attempted to simplify these regulations into one; now known as the Streamlined Energy Carbon Reporting (SECR) legislation.

From the 1 ^st April 2019, companies no longer needed to worry about the CRC or the MGHG as these were replaced with the SECR. But what does this new Legislation mean for organisations and who does it impact?

Who is SECR for?

Simply put, if you are a quoted company or are a large unquoted company by meeting two out of the following three criteria then you are within scope of this legislation:

250 employees or more
Annual Turnover in excess of £36 million
Annual balance sheet in excess of £18 million

If you have recently met the above conditions, then you may not need to comply with the regulations just yet. PASCHALi can assess this for you!

How do you comply with the SECR?

If you are a quoted company then you will need to include in your Annual Directors Report:

Your global Scope 1 & 2 carbon emissions
Your global energy usage
An appropriate intensity ratio
Energy saving opportunities that have been implemented in the accounting year

If you are a large unquoted company then you will need to include in your Annual Directors Report:

Your UK Scope 1, 2 and certain Scope 3 carbon emissions
Your UK energy usage
An appropriate intensity ratio
Energy saving opportunities that have been implemented in the accounting year

When must you comply?

SECR compliance must be completed annually and included within your Annual Accounts; Specifically, your Directors Report.

However, unlike the CRC, where you were locked in for the whole Phase which could last up to five years, the SECR is simpler i.e. if you do not qualify for two consecutive accounting periods then the regulations are no longer applicable to you.

How Can We Help?

We support a growing number of organisations comply with their energy and carbon legal requirements through our bespoke compliance and reporting service offering. Whether you need some friendly advice or full compliance support we are here to help you.

Hydrogen - A Green Gas?

Fri, 25 Sep 2020 10:27:31 GMT

Can the fuel that powers the universe, power our world?

In order to meet global carbon targets and lessen the impacts of climate change, we are going to have to find alternative fuels for all purposes. Renewable energy technologies are leading the way when it comes to replacing electricity generation, however these methods are often intermittent and cannot be used in every situation. For this reason, it is vital we find clean alternatives to combustible fuels that can be made available on demand. The answer to this problem could be the same fuel keeping the universe running, Hydrogen.

The idea of using hydrogen has been around for a while and a lot of research has gone into hydrogen fuel cells in the past decades. However, the implementation of these ideas never took off as large scale hydrogen usage requires a significant level of infrastructure and fuel cells are still very sensitive.

Quick Chemistry Lesson (you can skip this part)

Hydrogen can be obtained through the electrolysis of water, which splits the water into hydrogen and oxygen by inducing an electrical current into the solution. This process can then be 'reversed' in a fuel cell. The collected hydrogen is reintroduced to oxygen (in air) inside a fuel cell, which produces electricity and water. In some ways, hydrogen is essentially a form of storage for potential energy, like a battery.

Producing the hydrogen is all well and good, however as hydrogen is so small, light and has a boiling point of -252.9°C, yes minus 252.9°C, it is not very easy to transport. Fortunately, scientists have already come up with an effective solution to this problem: make ammonia! By combining hydrogen and nitrogen, ammonia (NH3) is formed. With a boiling point of -33.3C, ammonia is less complicated to liquify than hydrogen and has double the energy density, making it far easier to transport. The nitrogen used to create ammonia can be obtained through the fractional distillation of liquid air. This is the same method used to separate the components of crude oil.

How does Hydrogen Help?

As previously mentioned, renewable sources of electricity cannot be the answer to everything. Using hydrogen as a fuel source solves two issues with renewables: availability on demand and combustible fuels. The ability to store hydrogen, as ammonia, makes it one of the few efficient ways to transport clean energy. The infrastructure already exists in the form of gas tankers and pipelines which can be used to transport ammonia (hydrogen is so small it can escape a lot of existing gas pipes).

Although there is currently a push to move to electric, the transport industry will most likely see the biggest uptake of hydrogen usage. Airbus, Hyundai and Toyota (to just name a few) are working on new hydrogen powered vehicles for release over the next couple of decades. Renewable energy will also benefit from improvements to hydrogen technology. Low cost solar-to-hydrogen fuel cells could soon be seen on many roof tops.

Commercial Scale Hydrogen Production

On 8th May 2020, BP’s Australian branch announced a feasibility study into export-scale renewable hydrogen production. They plan to build a number of commercial scale green ammonia plants and will use the study to evaluate several different technologies and process configurations to manufacture green hydrogen and green ammonia. The pilot plant will aim to produce green hydrogen using on-site or renewable power (1.5GW required) from the grid. They will then convert it to circa 20kilo-tonnes of green ammonia per year, expanding to 1,000kilo-tonnes per year once developed to a commercial scale.

Pending the results of BP's experiments, we could see a big rise in the volumes of renewable hydrogen produced and used in energy markets worldwide.

Neutral, Negative, Zero, Positive... Carbon What?

Fri, 25 Sep 2020 08:01:12 GMT

Carbon Jargon for the Climate Bandwagon

Many businesses are setting goals to reduce their impact on the planet, but in this relatively new world of carbon reduction initiatives, it can be hard to understand what it all means. With this blog post, we hope to give you a better understanding of what a company means when they claim to be 'Net-Zero' or 'Climate Positive'. The definition of these phrase seems to vary company to company, but this is how we at PASCHALi interpret the current descriptions.

Net-Zero

When a company decides to become 'net-zero', it is aiming to balance out its own carbon emissions released each year by any means necessary, with the ultimate goal of annually adding no carbon to the atmosphere. This is achieved through carbon offsetting, emission reduction initiatives, green tariffs, etc. Think of it as an equation, where carbon emitted is equalled by carbon removed. The net result is zero! By achieving net-zero, a company's carbon footprint is zero, showing they are no longer contributing toward carbon emissions. Net-zero is a great first step for most companies and vital if we are to avoid temperatures rising by 2°C, but it is essentially just a way to 'stem the bleeding', keeping the climate at its current state.

Below are a few examples of companies who are targeting net-zero carbon emissions:

Sainsbury's: Net Zero by 2040

IAG (British Airways): Net Zero by 2050

Nestle: Net Zero by 2050

The United Kingdom is also targeting Net Zero by 2050, becoming the first major economy to set emission laws.

Carbon Neutral

Carbon Neutral is often used interchangeably with Net-Zero, although it is our opinion Carbon Neutral focuses more on reaching the goal by reducing existing emissions. There is an emphasis on analysing operations and processes within the business, cutting emissions at source rather than balancing out the equation at a later stage through offsetting and external projects. Carbon offsets can still be used to finalise the journey to zero carbon emissions, but these should be seen as a last resort.

Carbon Neutrality can be certified globally through The CarbonNeutral Protocol. The protocol follows five steps: Define, Measure, Target, Reduce, Communicate. It is an internationally recognised certification held by businesses of all sizes. Below are a few examples of certified Carbon Neutral companies and the years in which they achieved this:

Sky: Carbon Neutral since 2006

Microsoft: Carbon Neutral since 2012

Logitech: Carbon Neutral since 2019

Many companies that have achieved or are targeting CarbonNeutral certification also have separate net-zero or carbon negative goals, showing that although CarbonNeutral and Net-Zero are essentially the same thing, they can be seen in different lights to different organisations. Sky for example, was certified CarbonNeutral in 2006 but is working toward a net-zero target by 2030. Sky's carbon neutral certification was achieved through reducing emissions and offsetting the remaining carbon to have an overall impact of zero on atmospheric GHG levels. Where as most carbon neutral or net-zero plans just try to balance out carbon emissions, the Sky net-zero initiative aims to cause no harm to the Earth. Sky's statement says it is making a concerted effort to protect all aspects of the planet and its targeted response to carbon offsetting will have a greater impact on protecting existing eco-systems.

Carbon Negative

Carbon Negative is a step further than Net-Zero. Also known as 'Climate Positive', these companies are targeting the removal of more carbon from the atmosphere than they generate. By becoming carbon negative, companies can begin to remove their lifetime emissions from the atmosphere (e.g. Microsoft) and start to actively combat global climate change. Through carbon negativity, companies hope to reverse the impacts of climate change.

Here are a few companies who have achieved or are currently targeting Carbon Negativity:

Brewdog: Carbon Negative in 2020

IKEA: Carbon Negative by 2030

Microsoft: Carbon Negative by 2030

If we as a planet are to reverse global warming, carbon negative will have to be the ultimate goal.

Alternative Phrases Seen & Heard

Resource Positive - Coined by Starbucks, this shares the same goal as Carbon Negative but has a better fit for businesses with a heavy reliance on single use materials and ingredients

Zero Carbon - A different way of saying Net-Zero or Carbon Neutral

How Can We Help?

One of the services we offer is Net-Zero Carbon Suppor t . Whether your company is planning to go net-zero, is already in the process, looking to maintain your carbon neutrality, or is just interested in what it all means, we are here to guide you through the journey. We have extensive experience advising on carbon reduction initiatives and have also assisted and helped plan net-zero/carbon neutral projects for some major organisations.

We can help you calculate your requirements, find cost effective ways to cut emissions and determine the best offsetting schemes for your company to reach your goals.

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PASCHALi Is Now Carbon Neutral!

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