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The Effects of the Clean Energy Agenda on Business Electricity Rates  

By Edited Oct 5, 2016 0 0

The Cost of Clean Energy

New green energy policies are affecting the cheapest business electricity rates throughout the industrialized world. In the UK, development of renewable energy in the form of wind power has earned the nation a berth among the world's top 10 wind-generated electricity producers. Within the country itself, wind power constitutes the second largest renewable energy source with only biomass energy more prevalent. In time, as UK replaces old infrastructure with a new one that better accommodates cheaper and cleaner renewable energy, electric prices will go down. During the transition, however, business and industrial energy consumers can reduce their power bills by implementing strategies that help keep costs lower.

The Energy Agenda

The Kyoto Protocol of 1997 was a proactive United Nations response to the emergent global warming crisis. Since joining 37 other developed countries in signing the Kyoto Protocol and pledging to reduce its greenhouse gas emissions by 2012, UK has steadily implemented strategies for accomplishing this goal.

In 2009, the institution of the UK Low Carbon Transition Plan further raised the clean energy bar by detailing a plan to reduce the nation's carbon emissions by one-third by 2020 as compared to its emission levels of 1990. This plan promised to create more green energy jobs and increase energy efficiency in UK households over the ensuing decade.

According to the U.S. Energy Information Administration (EIA), the effort to reduce greenhouse gas emissions makes the renewables the largest growth industry in the energy field. EIA projects a renewable energy growth rate of 2.8 percent per year globally until 2040. Hydropower and wind power should account for about 80 percent of this growth in the coming decades

The Higher Cost of Renewable Energy

Building new generation facilities based on wind, hydro, biomass and solar power represents a considerable expense that raises the cost that business customers must pay per kWh. EIA reports that building costs for renewable power generating facilities are significantly higher than for conventional power plants.

The very nature of renewables such as wind and solar further adds to the price of electrical power. When the wind doesn't blow and the sun isn't shining, such facilities cannot generate a steady supply power. Further development of storage systems that hold power in reserve for such times will eventually solve the problem. However, in the foreseeable future, the end-user cost of intermittent renewable power will remain higher.

Getting the Cheapest Business Electricity

For commercial energy consumers, purchasing the cheapest business electricity possible is key to maintaining healthy business growth. One popular method for paying less is identifying the supplier with package pricing that meets the volume requirements of the business and its budget. Purchasing a fixed price, fixed term plan protects a business from regular rate hikes. Longer-term electric packages are often a good option for the business that can accurately predict its energy usage over time.

Government programs also help businesses cope with higher electric costs. The Green Deal is one such program that the government is making available to both homeowners and businesses. It supplies money for making energy efficient improvements to the home or office that translate into energy savings. Consumers can use their power bill savings to pay back their Green Deal loans.

Feed-in tariffs represent another opportunity for some businesses to reduce their long-term expenditures on expensive electricity. The UK announced generous incentives in 2010 for both homeowners and businesses to establish solar energy installations and sell the surplus electricity to public utilities . By generating their own electricity, businesses enjoy significant savings that pay for their out-of-pocket equipment cost in a few years' time. Additionally, selling surplus power enables them to recoup these costs sooner.

Another strategy for reducing electricity bills is using real time electricity monitors offered by several utility companies as part of their business service packages. By taking note of periods when electric use is high during the workweek, businesses can develop specific plans to reduce their power consumption and lower their electric costs.

One of the most reliable tools for reducing the cost of electricity is time. As UK wind, solar, biomass and other renewable power take the place of conventionally generated power, suppliers will recover their initial installation costs that elevated the price of electricity for consumers. Government will further reduce renewable energy subsidies and incentives that inflate the actual cost of electric power for businesses, and the price of electricity will go down.

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