Cut your energy bills with Climate Change Agreement: and Heck! Food case study
This article first appeared in Manufacturing Management on 15 October, 2020.
By Richard Palmer, Senior Consultant, Roadnight Taylor
In this year’s Budget, the government announced it was reopening its Climate Change Agreement (CCA) scheme to new entrants, which had been closed since 2018. With the confirmation that it is to be extended until 2025, the deadline for new applications is now 30th November 2020. Eligible businesses can sign up to a CCA to reduce the Climate Change Levy (CCL) it pays on electricity and gas bills – sometimes by up to 92% on electricity and 81% on other fuels – if they meet energy efficiency targets.
However, the advice from the Environment Agency is that businesses need to apply to their sector organisations by the end of September to allow sufficient time for processing, which means time is of the essence.
53 business sectors – including many in the manufacturing sector – can participate in the CCA, and it’s open to energy intensive companies of all sizes, not just the larger ones.
Many small to medium sized manufacturers can apply if they spend a reasonable amount on energy, and we are working with several smaller businesses to identify significant savings. However, for manufacturers who don’t have an in-house energy expert, awareness of the CCA scheme can be low. And with many manufacturing businesses currently reeling from the effects of the global pandemic and feeling the pinch of CCL charges, which were raised significantly from 1 April 2019, a CCA also represents a more attractive commercial opportunity than ever before.
One example of a smaller business is Heck! Food, a family-run food manufacturer based in Yorkshire. It is an innovative and entrepreneurial business focussed on sustainability, using compostable packaging where possible and implementing innovative measures such as using seaweed instead of beef collagen in its products. As a manufacturer with a relatively large energy spend, it has focused on energy efficiency measures such as smart sensors on its lights, alarms on its freezers and educating employees on the steps they can take to be more environmentally aware.
We initially worked with Heck! on a ‘traffic light’ study, which is designed to identify the suitability of a site for onsite renewable energy, such as solar PV or wind. For Heck!, we discovered that it could potentially be an excellent site for a solar PV installation, allowing it to benefit from a low-carbon technology and be relatively self-sufficient when it comes to electricity generation.
Our discussions then turned to the CCA – Heck! Food pays CCL, and our initial cost benefit analysis tells us that they could potentially save over £40,000 over the next 4 years if they meet their energy efficiency targets. This includes both savings on their CCL and also total electricity savings through energy efficiency gains.
However, like many smaller businesses, Heck! Food was unaware it would be eligible for the CCA scheme, as Hannah Wilkinson told us:
“Consumers are now much more aware of sustainability and look at both the ethos of the company as well as the product itself. We spend a considerable amount of time making our business as sustainable as possible, whether that is growing our range of products to cater for changing tastes and trends, to investing in environmentally friendly packaging.
“With energy being a relatively significant spend, we make sure we invest in measures such as energy efficient lighting and cooling technology. Therefore, considering longer term solutions such as renewable onsite generation are attractive to us.
“As a manufacturer, the level of our energy usage and emissions means that we do pay CCL. However, we were unaware of the CCA and how it could benefit a smaller business like ours. The cost benefit analysis shows us that we can make savings as well as implement measures to save emissions, which is a really compelling proposition.”
For manufacturers concerned about resilience or competitiveness in the wake of both coronavirus and Brexit, a CCA provides significant relief from the UK’s only remaining carbon tax since the abolishment of the CRC, and from electricity prices which are currently the second highest in Europe. The scheme also acts as a key enabler of sustainability and corporate social responsibility programmes.
Manufacturers interested in applying should have an assessment carried out to determine their eligibility, to analyse the cost/benefit of their application – and to identify their appropriate sector association. For smaller manufacturers like Heck! Foods, this can be a drain on precious time and resources.
We can provide a tariff review service that determines CCA eligibility whilst also scrutinising energy supply contracts, demand data and tariffs for a range of other bill-saving opportunities. It means that manufacturing businesses can maintain their focus on core operations without missing out on important cost savings.