The special relationship goes green

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The UK and USA have announced a new partnership, with aims to tackle issues surrounding energy prices and security that are impacting consumers and businesses alike.

This partnership will see the USA more than double its gas supply to the UK compared to 2021 figures, with the intention of reducing market volatility and reducing energy costs.

As part of this partnership, the UK Government has said that this will come with a large political backing for energy that can help both countries achieve their ambitious Net Zero commitments.

We don’t have to tell anyone about how enormous the potential is for green and net-zero industries in the North East. The Global North East report we partnered with the North East LEP and Department for International Trade on in 2021 highlights this. The US is a good target market for offshore wind, on top of the many other opportunities the American market holds.

We hope that as this partnership develops, the Government will acknowledge the North East as a beacon of opportunity for green energy, and can be used to trade knowledge and expertise.

Member briefing: Energy bills discount scheme

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Since the Chancellor of the Exchequer Rt Hon Jeremy Hunt MP published the new ‘Energy Bills Discount Scheme’ on 9 January 2023, The Chamber’s policy team have been working on a briefing document to provide Chamber members key information on the scheme and its implications for the North East.

This new scheme will replace the current ‘Energy Bill Relief Scheme’ and provide a discount on high energy bills for non-domestic consumers between 1 April 2023 and 31 March 2024.

Find out more and download the briefing document here.

You can also read our knowledge and research executive, Thomas Lonsdale’s thoughts on the scheme here.

Chamber reaction to energy support plan for business

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Responding to the release of further details from Government on the energy support plan for business, John McCabe, chief executive of the North East of England Chamber of Commerce said:

“On behalf of our members, we’re pleased to see the detail behind the headlines on support for business. This has been Chamber members’ number one concern for the last six months and it is vital that the proposed package meets the size of the challenge. However business, charities and public sector energy arrangements are very different to households. So we’ll be looking closely at the small print as well as making sure the initial six months of support doesn’t create a cliff edge for our members in the Spring.”

Chamber comment on new energy price caps

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John McCabe, chief executive of the North East of England Chamber of Commerce said, “We are pleased that the Government appears to have listened to the voice of business and acted quickly to tackle unsustainable energy price rises. Bringing businesses, charities and public sector organisations in scope of the proposals shows that Government understands that households and businesses both need help together if local economies are to weather this storm.

We look forward to hearing further detail, and ensuring North East businesses play a central role in the six month review period to ensure greater stability into 2023. We will also be inviting the relevant Ministers to join us in the region as part of that conversation.”

Chamber comment on energy price cap announcement

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Rhiannon Bearne, Director of Policy and Representation at the North East of England Chamber of Commerce:

“The new price cap is a bellweather for the economic stress we know so many businesses and households will be under this autumn. Our most recent survey of businesses told us that energy concerns are second only to inflation in members’ minds right now. Yesterday we supported the British Chamber of Commerce’s new five point plan to tackle the cost-of-doing business crisis. This includes a temporary cut in VAT to 5% to reduce energy costs and Emergency Energy Grants for SMEs. These calls are practical and proportion to the scale of challenges facing business and consumers right now. We urge Government to act.

Photo by KWON JUNHO on Unsplash

We need to evaluate the region’s ability to produce and store power

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Jack Simpson, international services executive, latest column for The Journal

It’s almost too hard to pick an issue to write about in this week’s column. From cost of living to geo-political instability, political leadership to Glastonbury. However, I want to be a bit more optimistic, and look at the North East’s role in the energy challenge.

According to our first Economic Survey of 2022, 89% of businesses were concerned about Energy prices. Socially, the North East has a higher than average UK fuel poverty rate, ranging 12-15%. As people and business are forced to make tougher choices on spending, it severely restricts growth, prosperity and health.

Following rising inflation, ongoing Ukraine conflict, and increasing demand, we need to evaluate the region’s ability to produce and store power to relieve the burden on business and people alike.

The region is already a leader in innovation of sustainable energy, attracting names such as BP and GE in recent months, but these are current short term research projects, an important piece of course, and compliments the dedicated workforce and skillsets of the region.

However, we need to ensure that this goes beyond innovation, that the region can manufacture and produce energy beyond the research board. Utilising energy enterprise zones, like Blyth’s Catapult, to foster SME growth is key for the regions long term energy goals.

Not to mention, the added economic boost to the region as a whole by attracting and developing energy innovation in the region. The North East LEP believes subsea sector alone, key to offshore wind, is worth 150,000 jobs and £1.5bn a year.

Port of Blyth has announced its own innovation zone in Bates Clean Energy terminal, acting as a hub of hydrogen, power generation and storage innovation, while on Teesside we have GE new blade facility opening.

We can also utilise the new service economy to support smarter energy distribution. Demand for energy is ever increasing, think about the rise of Electric Vehicles for example, so better use of data allows controllers to make smarter decisions based on local demands and regional capacity when directing energy.

The North East can also be a testbed of better energy policy. Across Gateshead, data is being used to influence policy and deliver low carbon energy to homes, while Chamber partners Thirteen, are working to install new home technologies to potentially save households 30% on their energy bills.

By targeting and developing net-zero energy network, we would create a more sustainable, resilient and prosperous North East.

More support is needed

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Marianne O Sullivan, policy adviser, North East England Chamber of Commerce latest column for The Journal.

The Government has announced that all UK households will get a grant which will reduce their energy bills by £400 from October. This is a welcome step in supporting people through the cost of living crisis.

It’s positive to see some support for households and further help offered to the most vulnerable households facing rising energy costs. This is especially important in the North East  where we have seen the UK’s biggest increase in child poverty from 2014/15 to 2019/20.  The cost of living crisis is likely to have a further negative impact on vulnerable households so the targeted support is welcome.

However, more support is needed for businesses to prevent further inflationary pressures in particular for SMEs who are struggling with rising energy costs and no price cap.

Companies are facing an increase in this expenditure but also rising prices in raw materials and staff costs. In our last Chamber Economic Survey 89.3% of respondents said they were  concerned about energy prices, this is a particular concern for the North East manufacturing sector and energy intensive sectors. The British Chambers of Commerce (BCC) has reported that 62% of businesses cite soaring energy bills as a driving factor in them raising prices.

Unless steps are also taken to ease business costs, they will likely feed into the inflationary pressure on the economy and lead to further price rises having a negative impact on households in the region.

Along with the BCC we have been campaigning for a  reduction in VAT to 5% on businesses’ energy bills to directly alleviate some of the pressure to raise prices. 

Ahead of our next Economic Survey we will be running roundtable discussions with members across the region to discuss what they are doing to reduce their energy usage/costs including investing in renewables, more energy efficient equipment, or trying to change employee behaviours. This will help us to gather information on what businesses are currently doing and what support they need to help them reduce energy consumption.

We will continue to work with our members and the BCC to campaign for a VAT reduction in businesses energy bills and further support from Government to reduce the cost of doing business.

Our view is that there needs to be an emergency budget to break the inflationary cycle. 

Offshore wind would not completely fill the energy gap

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Rachel Anderson, Assistant Director of Policy, latest column for the journal

I’m going to start this column by looking at the events of the past week.  It’s hard to avoid phrases like blow hard, hot air, pressurised, blades and nuclear option.  Now I know there are several things I could be talking about, but I can assure you none of what follows will relate to anyone’s current tax affairs, party investigations or the sound of knives sharpening in Westminster.

What I am talking about is the long-awaited Energy Security Strategy announced by the Prime Minister.  We’ve been waiting for decisions from Government for a long time and it feels as though “events” elsewhere have forced action.  Leaving aside the debates about where the fuel for our energy generation comes from, we have a looming energy gap in 2024 as old nuclear stations decommission and fossils phase out.  Whilst we’ve made real progress on renewables, there is still a gap & a cold, calm, cloudy day pushes us very close to demand outstripping supply.

So, what does the document say and how might it affect the North East? The main focus is on the Nuclear option and 8 new power stations built on existing sites. Building new reactors adjacent to existing means, the skills, a ready and experienced workforce and much of the tertiary equipment is already there. A small nuclear station like Hartlepool contributes approximately £50 million a year to the local economy.

The strategy skirts around onshore wind. It’s obvious that offshore wind would not completely fill the energy gap – it is very important and can be done at scale (with huge benefits to Tees and Tyne) but it is just not enough. Onshore wind is potentially the most egalitarian, everyone has it so has the potential to see a turbine from their kitchen window (I can see one from mine). That doesn’t go down well with very planning sensitive backbenchers.

There is an opportunity for a policy reset if onshore does return but it will be a heck of a political fight 2 years out from an election. There is also a boost here for the manufacturers and we have more capacity in the UK than previously so there is a dividend there.

Hydrogen has real potential both in terms of transport and retrofitting domestic and commercial as well as industrial uses. We have an expanding hydrogen manufacturing capability on Teesside with the potential to significantly scale up.

What is lacking is any indication of solid funding for this energy list, it’s a solid investment and it is not a quick fix.

Maybe buy a few more candles just in case.

The Rise of Energy Bills

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Rachel Anderson, Assistant Director of policy, North East England Chamber of Commerce said: “The impact of the energy price rises falls on households but will also hit businesses. Whilst the price cap doesn’t apply to businesses and they are already facing increased bills of their own, a shock such as this, will impact their workforce and customer base with serious knock-on effects.

“It is likely to impact most consumer facing sectors, retail and hospitality as these sudden increases in bills mean less discretionary spend for households. These sectors are already trying to get back on their feet and face huge cost increases.  This fact, coupled with less customers, is not a good mix for their recovery. Smaller firms are also particularly exposed as they have neither the protections or financial support provided to households, nor do they have the negotiating power of larger businesses.”

“Even for those in business to business sectors there will be a consequence, most likely in the form of wage pressures. This comes again on top of huge cost increases, labour shortages, transport costs including the ending of red diesel in April which will add more expenditure. Workplace and hidden poverty could be huge and the mental health strain can manifest itself in the workplace. Figures suggest a third of NE households are set to be in fuel stress

“There are many manufacturing chains’ products that end up with the consumer. Less money, less custom which is not good news for anyone.”

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EDITORS NOTES:

The share of English households experiencing ‘fuel stress’ (i.e. spending more than 10 per cent of their household budget on energy) will triple. One-third (33 per cent) of households in the North East are set to be in fuel stress, compared to 20 per cent of those in London come April (up by 24 and 13 percentage points respectively)

A straightforward solution in a world which is anything but

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If the last couple of years has taught us anything, it’s that businesses need to expect the unexpected. 

A period of massive political and economic change has meant trading has been extremely difficult, in particular for small- and medium-sized firms, who will have seen their cash flow significantly hit.

Some certainty in uncertain times

Recent times have been anything but straightforward for businesses and many are looking for ways to take control of their finances. The good news is that getting a smart meter for your business is a small change that could make a big difference.

A smart meter allows businesses to wave goodbye to estimated billing by securely and automatically sending meter readings to your energy supplier.  That means that you receive accurate bills, rather than estimated bills, allowing you the certainly of paying for exactly what you are using.

Plus you can also wave goodbye to time spent submitting regular meter readings, allowing you to focus on bigger things.

Doing your bit for the environment

As Glasgow hosts COP26 this year it’s a good reminder of everyone’s responsibility to become more conscious of their environmental impact.  Regardless of whether your business has three employees, or three thousand, we all should be aware of how much energy we’re using, and a smart meter is a step in the right direction.  From the moment your smart meter is installed, you’re helping create a smart energy system which could ultimately help reduce all our carbon emissions.

A smart meter is a positive step in taking control of business outgoings and if your firm has 10 employees or less your business could be eligible.

To find out more please click here https://bit.ly/3nBStrW. You can also contact your energy supplier or broker.  It could be one of the best calls you make this week.