How is the UK powered?

We have all heard about renewable energy, green energy and how low environmental impact energy can help power our businesses, we have even seen fields of solar panels and wind turbines but what exactly is that doing for us? How much power are these initiatives actually giving us?

For those of us that have Renewable Energy sources on our buildings the evidence is obvious, how much power we are generating and how that’s impacting on our bills and the energy we draw from the grid but for those who don’t the distance between renewable energy generation and the reliance on fossil fuels grows larger.

Sky new recently published an article that highlighted the sources of UK energy.

 

May was a good month for Renewable Energy!

Yes, it really was, in May the UK was powered for seven days without using any coal. This milestone has been achieved through the decades of investment in our renewable infrastructure.

Over 30% of the UK power in 2018 came from Renewable sources, installations of Hydro Power, Solar, Wind and Wave Power all contributing to achieving this great goal.

The UK main providers still have a reliance on Nuclear Power for almost 20% of its total power usage with Coal, Oil and ‘others’ making up less than 9%.

Coal power is the biggest loser from the data we can see and that trend is set to continue, the UK production of Coal has dropped dramatically and is anticipated to be less key in the UK’s power strategy year on year.

Why CCL (Climate Change Levy) is Increasing

Why Is CCL (Climate Change Levy) increasing?

Depending on your supplier you may or may not have been advised yet about the increases in CCL that comes into effect on 1st April 2019.

Climate Change Levy (CCL) was originally set up as a form of taxation to encourage the more efficient use of energy and thereby reduce carbon dioxide emissions. This year’s increase represents the biggest increase seen since the introduction of the tax in 2016 as demonstrated in the table below.

Climate Change Levy main rates

Taxable commodity Rate from 1 April 2016 Rate from 1 April 2017 Rate from 1 April 2018 Rate from 1 April 2019
Electricity (£ per kilowatt hour (KWh)) 0.00559 0.00568 0.00583 0.00847
Natural gas (£ per KWh) 0.00195 0.00198 0.00203 0.00339
LPG (£ per kilogram (kg)) 0.01251 0.01272 0.01304 0.02175
Any other taxable commodity (£ per kg) 0.01526 0.01551 0.01591 0.02653

 

So why the huge increase?

To simplify the complex burden and administrative headache to users having at least 1 settled HH meter and using 6,000 Megawatt hours or more currently registered under CRC ( Carbon Reduction Commitment) it was announcement in the Budget 2016 that CRC would cease with the last report being submitted by the end of July 2019 and the final surrender of allowances in October 2019.  As CCL was already a simple form of taxation currently in place at this time measured on individual usage it seemed the most logical way to recoup the tax revenue lost by closing CRC .  Unfortunately, that now means all businesses will be eligible for the CCL increase and not just those that were registered under the current CRC obligation.

But why am I now paying a higher CCL charge when I never qualified for CRC payments?

Whilst some would argue that doesn’t seem fair, it is based on every businesses usage and therefore could be argued that this represents a lot fairer system, in the fact that larger users will be contributing the most based on their output usage and smaller users will be affected minimally.  CCL is purely a taxation for businesses, and this does not affect individuals and domestic use.

Definition of Domestic:

  • school and university residential accommodation for students and pupils
  • homes for the elderly and disabled
  • monasteries, nunneries, and similar religious communities
  • children’s homes
  • hospices
  • self-catering holiday accommodation
  • houses, flats or other dwellings
  • supplies to community heating schemes
  • armed forces residential accommodation
  • caravans
  • houseboats

Unfortunately this is an increase that will affect every business unless you fall into the exemption category of having Gas and Electricity supplies that are eligible to be charged at 5% VAT,  A Business using energy generated from renewable resources, A Business using electricity generated from qualifying CHP (combined heat and power)source, Businesses using energy in metallurgical and mineralogical processes.  In addition, if you have a CCA (Climate Change Agreement) in place then you will be eligible for discounts of up to 90% on electricity and 65% discount on gas of the CCL charge.

The best way to reduce your CCL charges is to reduce your consumption for your premises and to ensure you are aware of all charges when procuring your energy contracts. Monitoring your energy consumption is the starting point for an energy reduction program. If you would like further clarification on CCL or indeed would like to reduce your consumption either directly or in line with a CCA agreement, then please contact Flame UK on 0115 896 5460 and we can discuss various consumption reduction programs with you.