More power, less carbon

The days of ‘paying the electricity bill’ are coming to an end, as power companies look to sell their services in a very different way.

It’s unusual for the major political parties to unite on an issue. But they do all accept the need to address climate change, and back the need for a transition to a ‘low carbon economy’ – one in which financial prosperity and low carbon operations are inextricably linked.

It’s difficult to predict the exact suite of policies that will come out of their thinking – and whether their response to rising carbon dioxide emissions will be bold and rapid enough. But npower business and Forum for the Future recently came up with their own ‘white paper’ on the low carbon economy, outlining why a transition is both necessary and inevitable.

The main headline is that we really need new business models if companies are to succeed in the future. Some companies are already responding to changing risks and opportunities. Soon, though, those that offer products and services with a lower climate impact than competitors will gain advantage in the marketplace – whatever sector they’re in.

Utility providers such as npower will be no exception. The power companies of today will become the ‘energy services firms’ of tomorrow. Rather than buying units of energy, we’ll be seeing customers paying for guaranteed heating, lighting and comfort. And if providers can offer those services using less power, energy efficiency will take on a whole new financial imperative for companies like ours.

Such low carbon operations will be about mutual benefit. The customer will see lower energy consumption and a smaller carbon footprint; in turn the energy supplier will be able to build stronger relationships with clients, who should come to value the provision of energy as much according to its carbon impacts as they currently do on price. Energy companies could also enjoy extra revenue from selling add-ons.

“Utility giants won’t just bill energy on consumption, but help their customers use less”

Utility giants won’t just bill energy on consumption, but will play an educating role to help their domestic and business customers use less – and different forms of – the stuff. For although companies have cottoned on to the kudos they can get by buying ‘green’ tariffs, there is still a lot of work to be done on changing the way they use that energy.

npower business has already made the first steps in developing services to help its 22,000 industrial and commercial customers thrive in a future low carbon economy. For example, our e3 energy package helps smaller businesses monitor energy consumption and reduce their carbon footprint. It’s already been taken up by a broad range of customers, from pubs and restaurants to chip shops and golf clubs.

The ‘Big Switch Off‘ is something else we’ve introduced. Last August Bank Holiday over 4,000 people pledged to turn off unused equipment over the long weekend. When leaving a photocopier on overnight uses enough electricity to print over 1,500 copies, the impact of these group actions is not insignificant.

We are also working closely with individual intensive energy users, including BT, Wembley Stadium plc, AstraZeneca and Sainsbury’s. We offer them ‘smart’ electricity meters, which go beyond simply recording the number of units used and automatically send data to the client online, meaning they can identify areas of good and bad energy performance. At Sainsbury’s, our energy management programme is now saving the company £10 million a year – from an initial £14 million investment in audits and new equipment. And that’s not to mention the reputational value of their shrinking carbon footprint. The next step in this deepening relationship is to assess the role technologies like biomass boilers and onsite wind turbines might play in energy provision.

I’d like to think that these new ways of working are indicative of how the sector will operate in a future low carbon economy. The challenge now is turning them from the exception to the norm.

Douglas McLeish is head of business development at npower business.

Download the ‘Low Carbon Economy White Paper’ at www.npower.com/lowcarbon

npower is a Forum for the Future partner.