A new forecast from Cornwall Insight will raise alarm bells for large energy users in Britain: non-commodity costs could add an average of £450,000 per year to bills by 2030.
These charges — everything on your electricity bill beyond the wholesale price of energy — are becoming a bigger slice of total costs. For industrial businesses, this is a serious concern – but we’ll explain how you can mitigate some of the costs through compressed air energy storage.
Fixed vs. flexible charges
The rise is largely being driven by “fixed” or “standing” non-commodity costs, including TNUoS fee increases (to help upgrade the grid) and the introduction of a new Nuclear RAB Levy (to finance nuclear infrastructure). There is little that businesses can do to mitigate them, unless you’re in the small group of firms that receives government relief.
But the good news is that other non-commodity charges are more flexible — meaning your business can reduce exposure through smart energy management. These include:
- DUoS (Distribution Use of System) Red Band charges – fees charged by local network operators for using the electricity network during peak times. By shifting energy-intensive processes away from Red Band hours, businesses can reduce their exposure to these expensive peak-time rates.
- Capacity Market charges – levies that fund energy providers to be available during peak demand periods. Companies can reduce costs by lowering peak-time electricity use or providing demand-side flexibility.
- Balancing Services charges (BSUoS) – fees associated with maintaining real-time grid stability (balancing supply and demand, frequency response, etc.). Shifting or storing energy helps smooth demand spikes, reducing the need for costly balancing actions.
- Climate Change Levy (CCL) – a tax on business energy use designed to incentivise efficiency. While partly fixed, reducing actual energy consumption during high-cost periods can meaningfully lower the levy.
This is where our PRISMA technology comes in.
How PRISMA can help – flexible compressed air energy storage
PRISMA is Innovatium’s award-winning Advanced Liquid Air Energy Storage (LAES) and management system, designed for manufacturing and processing businesses with a high compressed air demand.
It captures excess compressed air, stores it as liquid air, and releases it when needed. This offers a unique way to:
- Shift demand away from peak periods – cutting exposure to Red Band DUoS and Capacity Market charges.
- Smooth load profiles – helping to lower Balancing Services charges by reducing strain on the grid.
- Optimise overall energy use – reducing consumption during high-cost times, which also lowers the CCL fee.
- Reduce energy consumption by up to 30%, reducing the wholesale element of your bill.
- Take part in lucrative demand response schemes, which pay you for reducing consumption at peak times.
In short, by making compressed air usage more flexible, PRISMA gives energy-intensive businesses a practical way to take control of their flexible non-commodity costs, as well as the energy (“commodity”) part of the bill.
Advice and support
With Cornwall Insight projecting steep rises ahead, businesses can’t afford to wait. The companies that act early to embrace flexibility and smarter demand management will be the ones best placed to protect margins in a challenging market.
For advice on whether PRISMA is right for you and how much you could save, get in touch.