The FINANCIAL — Despite respondents citing their successes, there were several barriers to taking action on costs highlighted by the research. A lack of solutions with immediate impact was selected by 63% of businesses as the joint-top barrier to mitigating high energy costs, alongside environmental commitments limiting options. This was followed by high capital costs of solutions and being locked into long-term energy contracts (both 61%) and a lack of visibility into the energy consumption of operations (59%).
A lack of understanding of energy at board level was a barrier to mitigating costs, said 43% of respondents, with 45% citing the same lack of understanding across their entire organisation. Additionally, over half (52%) cited a lack of visibility into overall energy spend as a factor in not being able to mitigate costs further.
Costs and carbon
So far, few organisations have taken action to collectively reduce energy costs and carbon emissions, with many seeing the two as seemingly competing objectives. Nearly two thirds of respondents ranked ‘environmental commitments’ among their top five barriers to mitigating energy costs. Additionally, over a third (37%) said high energy costs had delayed their progress on decarbonisation, with only 3% saying they had accelerated progress.
Energy security (61%) and regulation (58%) ranked as the main drivers of decarbonisation efforts, with the latter becoming the most important for businesses thinking in two years’ time (60%).
“Achieving predictable and controlled energy costs while eliminating carbon emissions is a multi-year transformation, and will require long-term vision and leadership. But until more UK organisations think this way, they will continue to suffer the effects of volatile prices, and remain at the mercy of the geopolitical forces that have rocked energy markets for the past two years – and undoubtedly will again in future. The extent to which organisations can manage their operations to try to control volatile energy costs and carbon depends on their organisational sophistication, the availability of financing and their expected returns on investment”, Vicky Parker, Sector Leader for Power and Utilities at PwC UK, said.
“Government support has provided a helpful and much needed short-term buffer, but has allowed transformational thinking to become less of a priority for businesses. Despite over half of respondents saying the support has been either very important or essential for survival over the last two years, funding of this kind could impede wider economic growth – whilst in operation – and cannot be a permanent coping solution for volatile energy costs.
“It’s encouraging to see organisations are taking up efficiency measures, reviewing procurement and seeking to mitigate costs, but the momentum, at least so far, is unlikely to provide sufficient long-term resilience against price volatility. Looking ahead, ensuring the UK’s energy platform is not only low-carbon and sustainable but also secure and affordable requires new approaches and a commitment to long-term transformation. Recalibrating how energy is used, in order to ensure a competitive and resilient economy, as well as stable and affordable public services, is a crucial step in the nation’s energy transition.
“UK organisations need to adopt a pathway that is right for them, noting that it will likely evolve as technology advances and markets change. But the prize is significant: greater competitiveness, greater resilience and greater control, all in a global economy where energy efficiency and carbon emissions become ever more important as an axis of competition.”
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